Vitalik Buterin, co-founder of Ethereum, suggests that cryptocurrency’s superiority for payments is often underrated in comparison to fiat. He cites the ease of international payments and donations to charities as key points.
Buterin posted the comments on Wednesday in a Twitter thread, explaining how cryptocurrencies are “superior” for international business, charity, and payments within countries.
Many people continue to underestimate how cryptocurrency payments can be superior, not because of censorship resistance, but because they are so much easier.
International business and charity receive a huge boost, sometimes even receiving payments from within the country.
— vitalik.eth (@VitalikButerin)
August 24, 2022
Globally, cryptocurrency adoption has grown in payments. According to a July report by PYMNTS, “Paying with Cryptocurrency” found that 85% of businesses with an annual income above $1 billion said they use crypto payments in order to gain new customers .
There are also increasing numbers of crypto debit cards. Binance recently announced a prepaid credit card for Argentinians. These cards, like Wirex’s offer crypto cashback to users who pay through them. They allow for the purchase of fiat currencies and cryptocurrencies as well as cash withdrawals from ATMs.
Vitalik pointed out that cryptocurrencies can also be used to transfer money internationally or for charitable donations. International payments are typically made using fiat currency and can take time. This results in high fees. This is evident in the war in Ukraine, where Vice Prime Minister Mykhailo Fedorov tweeted Aug. 18 that Aid For Ukraine had raised $54 million.
Not everyone is as enthusiastic about crypto’s use for payment. Common objections include price volatility, ease-of-use, regulatory risk, high transaction fees, long processing times, and high transaction fees for certain cryptocurrencies like Bitcoin ( BTC), and Ether ( ETH).
Although it is possible for it to vary, Bitcoin handles five transactions per second (TPS) and charges an average fee of $0.819. As of Wednesday, Ether is handling around 29.3TPS with an average fee of $1.57. Visa claims it can handle 24,000 transactions per second, and charges between 1.5% and 2.5% per transaction.
The lightning network is a layer-2 solution that uses Bitcoin’s blockchain. It could solve Bitcoin’s slow TPS. While the Ethereum Network has been seeking layer-2 rollup technology such as zk–Rollups, to greatly reduce processing fees and times, the Lightning network was developed.
Stablecoins are cryptocurrencies that can be tied to another asset (such the United States Dollar) and have become a very popular means of exchanging, especially in emerging countries.