Anders Langberg: The Financial Exclusion On Ethereum Is A Form Of Censorship
In this opinion piece, Anders Langberg explores the high gas fees on Ethereum and how he believes they have led to financial exclusion and even a form of censorship.
After a mild excursion into ETH-land, and paying over $100 to unwrap, swap and stake some tokens from Tezos to Ethereum, I finally started to reflect on what the high fees on Ethereum really means.
They are in fact a soft censorship on using the network, only allowing the already rich to use its services. For a technology that has the potential and promise to equalize the global financial system it just shouldn’t be like that.
The fees on Ethereum have been a constant sore point for years now. At this stage, I believe that it’s what the Ethereum community actually wants. Just like buying a really expensive NFT and having it as your picture profile shows what kind of money you can spend (or put aside), the simple fact that you do your business on Ethereum means that you’re in a very exclusive club.
According to Credit Suisse’s Global Wealth Report for 2021, 55% of the world population has less than $10k equivalent in wealth, and most of that is usually not in financial assets. Even in developed countries, 30% of adults fall into this category.
Why is this significant? Because on the most well-known and popular crypto network a single interaction with a smart contract routinely costs in the $50 range just for network fees. This means that any transaction or operation where the value exchanged is below $5,000 is simply not worth it since it’ll be eaten by fees.
You’re an artist in an area where the regime controls what can be created and wants to mint an NFT? Better sell it for more than $5,000. You want to convert ETH to USDC and send it to a friend or family member outside of government control? Make sure to save up more than $5,000.
If you routinely trade in the $10k-100k range, buying Loot and Bored Apes this might not seem like a real problem. If you read this article, you’re probably in this group.
Sure it’s a nuisance, but nothing that seriously hurts your returns or ability to transact. For more than 55% of the world’s population, this de facto excludes them though, making this a form of censorship since they can’t participate.
Many times it’s the people in the 55% who need this functionality the most, either having limited financial tools or oppressive regimes limiting what they can do.
I understand that many projects and artists target Ethereum because that’s where the big money is. But doing so means that you openly say that you don’t care about most of the world and also don’t care about the environment.
Blockchain technology is supposed to be censorship-resistant, please don’t impose one form of censorship with another just because that’s where the elite artists and collectors reign, or seemingly limitless capital for decentralized financial experiments.
Launching an NFT collection on Ethereum is an actual investment not just of time but also gas fees, and only the elite and established artists can afford to take such risks.
And forget about getting started in DeFi unless you’re part of the wealthiest class within this world, because if you don’t have $10k plus laying around to play with, you just don’t stand a decent chance on Ethereum.
There are alternatives that are cheap and green to use, decentralized and censorship-resistant. We must collectively make sure that any entity that directly or indirectly invests in or uses Ethereum knows what it is they are supporting, because unlike 2017 we now have a choice.
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