Reduced transaction costs give crypto payments new meaning

A major event for the crypto world - Korea Blockchain Week (KBW) - began yesterday. KBW attracts key figures from leading DeFi projects, governments and financial institutions. Among them are Vitalik Buterin (Ethereum - Chief Scientist and founder), Changpeng Zhao (Binance - CEO and founder) and Sandeep Nailwal (Polygon - co-founder). The event by its popularity and the opportunity to hear the thoughts of DeFi leaders is media-worthy and worth following. 

During the event, the most famous statement was given by Vitalik, who announced that cryptocurrency payments will "make sense again" after transaction costs drop to a fraction of a cent thanks to smart contracts (roll ups) on the second level (level 2) of the Ethereum blockchain. 

Buterin said that today with roll ups, transaction fees are generally somewhere between 25 and 10 cents, and in the future with complete performance improvements of the new contracts, transaction costs could go down to "5 cents, or even maybe as low as 2 cents." So it will be much cheaper and more accessible. The Ethereum founder called the blockchain update "a real game changer."

Despite Bitcoin's initial operation as a speculative means of storing value, Buterin stressed how important it was to create a peer-to-peer payment system that was cheaper than the traditional banking system. However, since 2013, according to the Ethereum founder, the situation has changed through the growing popularity of cryptocurrencies. 

Ethereum being a financial bridge, connecting hundreds of projects, is probably the most important element of crypto payments. New technological developments are expected to restore crypto's competitiveness in this field. Smart contracts in the new infrastructure (roll ups) are expected to save not only money, but also energy and computing power. 

Another wave of growth?

The crypto space didn't have an easy year. Giant declines caused potential losses for investors and exposed many scams that preyed on the popularity of tokens such as Terra/Luna. However, every crash has its good side - it allowed to get rid of unprofitable and inefficient solutions and caused the fundamental value of projects/companies to increase by focusing on the core business. Over the past week, however, the amount of positive news seems to have increased significantly. The most important of these are Instagram's adoption of NFT and ETH's transition to a new blockchain. These could have broad implications for the market as a whole and seem to prolong investor optimism for the next possible waves of growth.

Today on the Conotoxia MT5 platform, ETH and BTC are up 1.4% and 3.3%, respectively, as of 11:00 GMT+3, reaching June price levels. Flow, mentioned in the previous commentary on cryptocurrencies (05/08/2022), is the strongest gainer on the platform. At the same time, it records a daily increase of 15.3%. The token has gained more than 65% since the announcement of its partnership with Instagram.

Author Bio

Daniel Kostecki is an award-winning senior market analyst, victor of the FxCuffs statuette for “Blog of the Year” and “Personality of the Year”. He has 15 years of experience on the financial markets and a diploma in Economics from the University of Szczecin in Poland. Daniel is privately connected to the financial markets since 2007 and professionally - since 2010. Author of numerous commentaries and analyses of the situation on the financial markets and a guest on Polish TV, press and radio.