(Kitco News) Vitalik Buterin, one of the founders of Ethereum, praised the benefits that the merger would bring, including significantly lower transaction fees and a number of major upgrades.
“The consolidation is coming. This is the effort we’ve been working on for the past eight years,” Buterin told a crowd of crypto-hungry investors and developers at the Blockchain Futurist conference in Toronto this week.
The news about the Ethereum merger, which is likely to take place on September 19, Leading the cryptocurrency rally in late summer. Ether (ETH) price is up 70% in the last 30 days. The world’s second-largest cryptocurrency traded near two-month highs on Thursday, surpassing the $1,900 level.
The merger will see Ethereum move to a more energy-efficient Proof of Stake consensus mechanism than the power-intensive Proof of Work model, which is also used by Bitcoin. To read more about merging, click here. ??
According to Buterin, the first thing Ethereum users will feel is a drop in the cryptocurrency’s energy consumption by more than 99.9%. The second thing is much lower transaction fees.
“I know inflation is at 8.5% and gas prices are going up. But gas prices here are going down,” he said Wednesday. “Low transaction fees are the only thing that can make blockchain more accessible to anyone.”
Buterin said on Wednesday that the post-merger Ethereum transaction fee could reach $0.002. This is key when looking at average daily income around the world.
“The average daily income in Canada is about 113 USD. In Poland, the average daily income is 42 USD. In Mongolia, it drops to 16 USD, and in Zambia [it is] 4 US dollars. Pointing out that there are very significant differences, Buterin said: “The average transaction fee on Ethereum in the past two years…was somewhere between $1 to $20.”
Buterin also warned that if a new bullish cycle starts, it will pay much higher transaction costs. “If we see one of these bull cycles pop up again any time soon, the fees are going to go crazy again,” he said.?
But even the $5 gas fee in Ethereum is too high for some countries. “If we’re talking about blockchain being this universal thing that is supposed to empower people who are not being empowered today in underserved countries, you can see how it is starting to look less viable,” Buterin explained.
This is one of the important things a merge can fix. “Today, with cumulative, sometimes it’s 25 cents, sometimes it’s less than 25 cents. And if you analyze what will happen as a result of the improvements, we are talking about a potential fee that could be 0.05 cents, or maybe as low as $0.002.” “Extremely cheaper transactions to the extent that cross-chain transactions are more affordable for many today’s unaffordable people.”?
– Kitco Crypto (KitcoCrypto) August 10, 2022
Possibility of post-merging
Buterin’s keynote speech focused on the many opportunities that the Ethereum merger program opens up, including a range of upgrades and new projects.
“At the same time as the shift from Proof of Work to Proof of Stake, it’s also an opportunity to take some of the ideas we’ve learned over the past eight years and use that to redesign the different parts of the Ethereum chain.”?
One of the ideas Buterin highlighted is bringing back cryptocurrency payments as a trend through lower power and lower transaction fees. “In 2013 there was a big social movement where people were really excited about trying to get the bitcoin economy in person. But pretty quickly after a few years, people mostly stopped talking about these things.”?
The case charges high. In 2013, the argument for Bitcoin was the lower fees compared to PayPal or Visa. “Since then, this argument has become completely false. [But] Now, if blockchains are scalable, guess what? He said, “The argument becomes valid again.” If we have more scalable blockchains, can we bring back crypto payments? It’s something worth trying.”
Another future development that Buterin is excited about is a project called Login with Ethereum, where people can use their Ethereum wallets to log into web services. “It’s basically the same as the Telegram clone, except you don’t have to give your phone number to use it,” he said.
Social recovery is another Web3 concept that Buterin is excited about. “You could say I’m going to have five recovery contacts. Two of them would be an organization. One could be your employer. One could be my father. One could be a friend. Any three of those five could come together and restore your accounts and reset your key to something else. And that’s something you can put in the rules on a smart contract, and put that in the chain.”
Hype around NFTs
The Ethereum co-founder also criticized some of the hype surrounding NFTs, noting that in the 1990s there was a great idealizing effort to try to create an ecosystem where everyone had their own cryptographic key.
“In the ’90s, you had these deep, philosophical arguments about this great fundamental battle between nation-state power and the desire for individual freedom. Fast forward 20 years, and they’re: ‘Look, he’s an ape!'” “”
This is the double-edged sword in cryptography, according to Buterin. The pre-crypto space was a perfect decentralized technology move with not enough incentives. He noted that today’s crypto space is full of big incentives, but “it has incentives like going in very strange directions sometimes.”
– Kitco Crypto (KitcoCrypto) August 10, 2022
Buterin also spoke at length about scalability and more complex concepts such as initial massive sharing and light sharing, which can increase the amount of data the Ethereum chain can hold. Buterin sees the numbers going around 16MB, from average data block holdings of only about 80KB.
“We are talking about Ethereum over the next two years being able to process a much larger amount of transactions than it was before,” Buterin said.
After the merger, Buterin envisions the Ethereum identity ecosystem truly growing. “For me, this is probably the best candidate for some sort of second major application for Ethereum apart from the DeFi ecosystem,” Buterin said.
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