Centralized and decentralized payments networks: a simple cost comparison

Peter Stella

Abstract

The original motivation for the concept paper introducing the Bitcoin blockchain and distributed ledger technology was to enable peer-to-peer transfers of currency and thereby eliminate the role of fiat money, banks and central banks in payments systems worldwide. Although subsequent generations of blockchains have been designed to enable additional applications such as the transfer of artifacts other than their native currencies (eg, tokenized bonds, nonfungible token digital artwork and items or objects purchased in online video games), the most prominent networks continue to stress their decentralized payments or “currency” applications. In this paper we examine the feasibility of the widespread adoption of cryptocurrencies in payments by comparing the output and cost statistics of several centralized payments systems with those of Bitcoin, Ethereum and Solana.