In the intricate world of payments, there's a simple logic that anyone familiar with computer processing will understand instantly. This unseen logic is the backbone of cryptocurrencies, and it's why we should consider them seriously.
As the founder of Kubera, I'm immersed daily in the complex landscape of the SaaS ecosystem. From the plethora of SaaS tools we utilize - servers, databases, analytics - the costliest is not your typical software vendor. It's Stripe, the payment processor.
Most people don’t realize this as Stripe operates behind the scenes. They quietly skim a percentage from each transaction we process, indifferent to the computational effort involved. In essence, almost every user is paying a high rent on the Internet without realizing it.
To put this into perspective, imagine if the cost of using Microsoft Office began to increase because the numbers in your Excel spreadsheets were getting bigger. Or if Google started charging more for Gmail because the emails you were sending started to bring in more business for you. It sounds ridiculous, doesn't it? Yet, that's exactly how the payment industry and even App Stores operate.
During my personal experiences with stablecoins, a form of cryptocurrency, I found a marked contrast. Costs were lower, and transactions faster, not due to the monetary size of the transaction, but the computational resources used.
This is where the philosophy of Bitcoin and Ethereum shines. Bitcoin's fees are determined by the size of information in bytes being transmitted, not by the transaction's monetary value. Ethereum's "gas" fees, on the other hand, are based on the computational complexity of a transaction, rather than its financial value.
Cryptocurrencies are, in essence, digital extensions of our computers, charging based on computational effort, not on the 'value' of the transaction.
Despite the logical alignment, many remain tethered to traditional, percentage-based payment systems and App Store models.
It's important to note that cryptocurrencies, initially hampered by scalability issues, have evolved over time. With the advent of Layer-2 solutions, blockchains can now handle a higher volume of transactions more efficiently. Consequently, crypto fees can indeed compete with, or even undercut, traditional systems.
The Internet needs crypto – not merely as an alternate currency but as a mechanism to bring our financial transactions in line with computational logic. It's high time we transitioned from a 'value-based' system to a 'computation-based' one.
- Rohit Nadhani
