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After Ethereum merge: crypto payments could become mass-capable

 


Ethereum co-founder Vitalik Buterin spoke at two conferences in Asia about the opportunities and risks of the Ethereum merge.


Vitalik Buterin stated during a keynote speech at Korea Blockchain Week 2022 that crypto payments “could become mainstream” after the Ethereum merge . The crypto developer had previously warned of an unfavorable development in the balance of power of the hard fork stablecoin providers associated with the merger .


Ethereum Merge and Layer 2 Payments Solutions: The Way to the Mainstream?

The high transaction fees (“gas fees”) have been one of Ethereum’s biggest problems so far. With high network utilization, the gas fees sometimes rose to several hundred US dollars.


At the time of writing, gas charges average $0.26. For more complex transactions (e.g. an NFT sale or a swap), you currently always pay 1-3 US dollars. Transactions of smaller amounts are therefore still unattractive. However, according to Vitalik Buterin, that will soon change:


“Once we have the scaling technologies […] we could actually try to make crypto payments mainstream.”


The merger will switch Ethereum’s consensus mechanism from Proof-of-Work (PoW) to Proof-of-Stake (PoS). Since PoS no longer requires energy-intensive mining, the ETH transaction costs should also drop significantly after the merger. Vitalik Buterin believes that the optimized Layer 2 payment solutions in particular could make crypto payments mass-capable after the merger.


"In the future, with rollups and all the efficiencies ... transaction costs could drop to $0.05 or even as little as 0.2 cents."


A Layer 2 solution (or rollup) is software that handles ETH transactions outside of the Ethereum blockchain (the first layers), while “inheriting” the security and some other properties of Ethereum. By bundling transactions, transaction fees are reduced at the same time.


But while Vitalik Buterin remains optimistic about Ethereum's future, the programmer warned of the power centralized stablecoin providers could have in future hard forks.

Last week Vitalik Buterin spoke at the “Buidl Asia” conference in Seoul and commented on the influence of stablecoin providers on the Ethereum network.


In a so-called hard fork, a copy of a blockchain is created. Developers can work on the new or the old version of the blockchain after a hard fork. The problem: With a hard fork, all assets, including stablecoins , of a network are also copied. So the number of stablecoins doubles, while the assets used for backing remain the same. Therefore, according to Buterin, centralized stablecoin providers could choose not to recognize the stablecoins on either version.


Buterin described the influence that Tether or USCD could have on upcoming hard forks as “ significant ”. However, the crypto developer stated that stablecoin providers will not cause any problems with the hard fork associated with the merge.


The Ethereum co-founder also announced the final testing phase for the merge, which is set to take place this week. If the tests on the Ropsten testnet are successful, then Merge is scheduled to take place in September 2022 as planned


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