Vitalik Buterin’s Ethereum Payment Incident Raises Questions

Vitalik Buterin shared an anecdote about buying coffee with Ethereum. Critics responded saying Ethereum falls short as a payment chain.

Man looking into the transaction process of Ethereum.
Created by Kornelija Poderskytė from DailyCoin
  • Vitalik Buterin shared an anecdote about buying coffee with Ethereum.
  • Critics responded, saying Ethereum falls short as a payment chain.
  • Ethereum is actively working to address problems related to cost and scalability.

With Ethereum price uncertainty looming as the bears remind the market of their presence, Vitalik Buterin shared a light-hearted anecdote about the challenge of buying coffee using ETH.

Buterin recounted his experience at a Buenos Aires coffee shop buying food and drink for a group. He explained that payment was made by sending ETH from his wallet to a Binance account, which took “a couple of minutes” to confirm. During the wait, he sent extra ETH from a different wallet, just in case. 

Both payments were eventually confirmed, and Buterin indicated that he was “fine” with giving the second payment as a 100% tip for good service, including the gas fee of up to $4 he paid to execute the original payment. However, Ethereum critics jumped on the incident as evidence of the chain’s shortcomings.

Ethereum’s Viability as a Payment System Questioned

Commenters on Adamant Research’s Editor-in-Chief Turr Demeester’s post on the incident criticized Ethereum’s flaws as a payment chain. Jan3 CEO Samson Mow sarcastically remarked, “This is the future of payments.”

Demeester joined in, echoing Mow’s satirical tone.

On a more constructive note, one Twitter user suggested that the Bitcoin Lightning Network is better suited for small payments and claimed that Buterin’s experience would have been smoother had he used that instead.

Ethereum has long been ridiculed for being slow and expensive. In 2022, Managing Partner at Dragonfly Capital Haseeb Qureshi likened Ethereum to New York – in that it has the glitz and glamor of the biggest DeFi projects and the most Total Value Locked (TVL) on chain, but only the wealthy can afford to use it.

The Merge upgrade, Ethereum’s answer to these problems, which went live in September 2022, transitioned the chain from a Proof-of-Work consensus to a Proof-of-Stake one, fostering greater energy efficiency and laying the foundation for future scalability improvements. 

However, the peak average gas price in September 2022 rose to 25.47 qwei, and hit a post-Merge high of 155.84 qwei on May 5, 2023, suggesting developers have yet to address cost concerns in any meaningful way.

On the other hand, Ethereum’s latest upgrade, Shanghai, which occurred in mid-April 2023, enabled the withdrawal of staked Ethereum. The resulting rush to withdraw and participate in Ethereum staking led to an anomalous increase in network activity and a correlating gas price spike that has not been seen since.

On the Flipside

  • Ethereum is a work-in-progress with an active roadmap to target cheaper fees, improved security, better user experience, and future-proofing.
  • As the leading Layer-1 by market cap and TVL, the chain’s value proposition extends beyond payments.

Why This Matters

Buying coffee with crypto is an often-used litmus test for the industry’s progress against legacy finance. Buterin’s difficulties buying coffee with Ethereum showed the chain currently lacks speed and is too expensive, highlighting it is not ready to take on TradFi in its current guise.

To get updated on bearish Ethereum whale activity, read: 

How ETH ICO Whale’s $116M Movement Warns of Bearish Signal

To discover Indonesia’s latest play to support the crypto industry, read:

Indonesia Launches National Crypto Bourse to Strengthen Investor Protection and Regulatory Oversight

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Samuel Wan

Samuel Wan is a finance professional turned crypto journalist, known for his insightful reporting on market trends, regulatory changes, and technological developments within the digital asset industry. His ability to simplify complex concepts and report the facts has made him a trusted source in the crypto community. Beyond his writing, Samuel is an active mountain biker and gamer.