After the blockchain technology took the world by storm in 2017, the number of industries that promoted the trend quickly grew. And given the popularity, convenience, and countless advantages that this framework provides, it comes as no surprise that many companies looked for ways to incorporate it into their business models.
Now that the initial investors have seen incredible returns, the blockchain-related topics have started cycling around the payment sphere. In other words, global think tanks are starting to invent strategies to apply decentralized technology into people’s everyday lives. So, what are some of the reasons that make it reasonable to believe that the blockchain will revolutionize payments?
Although there are several selling points, cryptocurrencies originally reached their fame by promoting a system that is completely independent. This is where the term “decentralized” comes into play. Blockchain technology requires no financial intermediaries that have to mitigate transactions. Instead, the entire concept is based on pre-programmed algorithms that seek out inputs absent from human guidance.
This translates into the everyday payment systems as the providers are starting to look for ways to automate. Meaning, instead of hiring agents to proofread every transaction before approving, they are inventing algorithms and programming software to handle these tasks. Additionally, the process is evolving at an incredible pace courtesy of artificial intelligence.
Low Transaction Fees – Cross-Border Payments
When sending funds via traditional banks, the fees range from borderline marginal to overly high. Take international transfers that are wired from one account to another as an example. In such situations, one is first going to face the conversion fee. That means that every time someone is sending currency different than what the recipient’s country uses, there will be a minor loss of funds due to the neverending variations in currency caused by inflation. Additionally, almost every bank charges a flat fee that ranges anywhere from $35 to $60 per wire.
Well, blockchain allows people to sidestep these costs since the payment mechanisms that are put in place require no additional expenses just to transmit funds from one user’s account to another. More importantly, the speed at which the payments will be delivered to the recipient is much more impressive than what an average bank can achieve. For instance, a company like Bank of America would require one to two business days to complete an international wire set-up. With blockchain systems, the entire process is going to be automated to a point where it could happen within seconds. Hence why not having intermediaries who have to verify transactions is an enormous upside.
Even though it is hard to argue that traditional banks lack safety, there have been many historical scandals where people lost their faith in institutions. For instance, during the Great Depression, banks cost millions of Americans millions of dollars. As a consequence, the Federal Deposit Insurance Corporation was established. Will something of such grand proportions ever take place again? Probably not. Nevertheless, many users that rely on blockchain payments prefer to be the ones in charge of their assets’ security. The is so that they do not have to put their faith into someone else’s safety measures. Instead, as long as they are able to keep their private keys secret and avoid using high-risk, hot-environment-based platforms, their blockchain payments should never be affected by malicious attackers.
Ultimately, multi-platform exchanges and databases feature the vast majority of crypto-based systems. For instance, someone who operates their coins on networks like Coinbase can simultaneously access it on their computer, phone, tablet, and pretty much anything that has a connection to the internet. More importantly, these users will be able to make transactions directly from all these devices. With many banking institutions, it is mandatory to have access to a desktop computer to handle certain requests. Sending a wire payment to another country, per se, often has to be done from a desktop computer due to the complexity of the endeavor.
In addition to all of the aforementioned, blockchain payments have only begun to revolutionize the market. As time passes, you can expect more inventions and major improvements to the users’ experience. Thus, financial magnates that are advising people to learn as much as possible about this trend are certainly right to do so!