Many recent talks have centered on the potential effects of a global blockchain payment system. It may be argued that the glass is only partially full. But multiple studies are showing that the glass is actually half full, according to academics. Cross-border payments made using blockchain technology are not only 40% to 80% less expensive than equivalent old methods, but they also complete astronomically faster.
The world of payments is undergoing a transition as it adjusts to utilize blockchain technology to satisfy the scalability and borderless demands of a rapidly expanding global economy, much to how telephones went from PSTN lines to copper lines to 4G and now 5G.
Global payments and blockchains: yesterday, today, and tomorrow
The payments industry has been plagued by problems including excessive costs, a lack of transparency, slow speeds, and accessibility for far too long. The payments system has historically relied on third parties and reliable sources (sometimes known as middlemen) to facilitate transactions. Since each middleman or vendor takes a little cut or charge, these facilitators raise the cost of transactions.
Traditional payment methods take significantly longer and are more inconvenient. They are significantly more vulnerable to holdbacks and fraud due to a lack of transparency, in addition to the fact that international payments can take days to complete, the difficulty of working hours in different timezones, and the requirement for oversight and transactors 24/7, regardless of weekends and holidays.
Recall that in 2018, approximately 78% of companies reported experiencing B2B payment fraud.
Today, blockchain technology provides all customers in the financial sector with lower prices, quicker transaction times, improved security, and total transparency. Previously reliant on middlemen to move money from A to B, merchants and retailers now experience accountability, transparency, and higher advancements in terms of speed and cost.
By extension, the trend is now opening possibilities for quicker cross-border payments and international transfers as digital payments are proving to operate incredibly well within the marketplaces of industrialized countries. Cross-border payments are currently hastily pieced together. The introduction of digital payment systems will, however, usher in a world-altering, seamless process that will permanently alter how we interact with value across borders.
Transforming international Trade
By 2023, 5.5 million US adults, or 2.3% of US Internet users, will utilize digital currencies and cryptocurrencies to make payments.
One can only speculate about the impact of blockchain technology on the financial sector given the aggressive entry of major organizations like Visa, MasterCard, Strike, Stash, and many more. The widespread use of digital payments and currencies is being facilitated by a number of different enablers, including digital currencies, currency tokenization, stablecoin issuance, on-chain transactions, and more.
Financial or multinational corporations are only a few of the ones vying for a piece of this pie.
To be competitive, innovative, and current, every major bank in the world is currently thinking about or conducting experiments with digital payments. 90% of all banks worldwide are waiting for regulatory approval, and all banks worldwide are awaiting clarity. Smaller, less well-known banks are being held back from entering the new world of digital payments, either because of their risk appetite or because of murky legislation.
However, as stablecoin regulators aggressively advance the regulatory movement and open doors globally, these obstacles will soon become obsolete.
The future looks bright for digital asset payments
It is inescapable to draw the conclusion that digital currency technology is here to stay, regardless of where you stand on this contentious intersection of blockchain technology and its effect on the world payment system. The only thing left to determine is who will cross the finish line first given that every bank and firm is already considering or rushing toward digital currency.
As a result of the global influence of blockchain technology, growing engagement from both developed and developing nations has the potential to yield significant benefits. Consumer enablers will proliferate over the course of the next five years, and many of the most prestigious banks in the world will plunge headfirst into what will eventually emerge as the future of finance.