As a seasoned researcher with a penchant for exploring the intersections of technology and finance, I find myself captivated by the transformative potential of blockchain technology in reshaping the global payments landscape. Having spent countless hours poring over reports like this one from Binance, I can confidently say that the future of remittances and cross-border transactions looks decidedly brighter with blockchain-based solutions.
Based on a report from Binance, it’s expected that blockchain technology will significantly reshape the global payment landscape by tackling inefficiencies within conventional financial systems.
According to Binance’s study, although services like Visa and Mastercard provide quick approval for payments, the actual transaction settlement can take multiple days in some cases.
In cross-border transactions, the delay is particularly noticeable due to the potential complications in coordinating communications among banks situated in various nations, which may lengthen the processing time.
Instead, traditional payment systems often involve lengthy settlement times. However, blockchain-based transactions can be settled almost instantly. For example, a 2021 pilot by Visa and Crypto.com in Australia demonstrated this speed with USDC (USDC) and Ethereum (ETH) blockchain technology enabling cross-border transactions to be completed much more quickly than the usual time frame.
Blockchain payments are cheaper than traditional means of payment
As an analyst examining the subject, I’d like to shed light on a key finding from our report: the substantial cost benefits associated with blockchain-based payments compared to traditional remittance services. In areas such as Sub-Saharan Africa, these conventional methods can be quite pricey, with an average fee of sending money amounting to 7.73%.
Employing blockchain technology for transactions is gaining more traction these days, largely because it offers significantly reduced costs compared to conventional payment systems.
Compared to other blockchain networks, Solana (SOL) facilitates transactions at a significantly lower price. Typically, transferring stablecoins through Solana costs only pennies or even less.
Stablecoin popularity
In the year 2023, stablecoins have proven crucial for transactions on blockchain networks, handling a total of approximately $10.8 trillion worth of transactions, as per the report. However, when we eliminate automated activities, the value drops to around $2.3 trillion.
The market for stablecoins, a type of digital currency, has seen consistent growth, currently valuing more than $160 billion in total. This sector is primarily controlled by two major players: Tether (USDT) and USDC, who together account for approximately 94% of the market share, with Tether holding around 73%, while USDC holds about 21%.
Challenges in blockchain infrastructure
The report noted that current blockchain infrastructures have their challenges. Scalability remains a key issue, with even the most advanced blockchains like Solana struggling to match the transaction processing speeds of established payment networks.
Delving into my study on Solana, I’ve uncovered that it has faced numerous interruptions since its inception, casting doubt on the dependability of blockchain technology when it comes to accommodating large-scale institutional operations. This discovery sparks intrigue and calls for further exploration to ensure we can confidently leverage such technology in high-stakes scenarios.
“Ever since its debut in 2020, Solana has faced seven significant interruptions, halting block production, with the most recent happening in February 2024. These recurring issues could make institutions hesitant to depend on blockchain technology for critical business functions like transactions.”
Binance
In spite of these hurdles, the report indicates that blockchains could present an appealing substitute for conventional financial systems. These technologies’ transparency and decentralized structure encourage more trust and security within financial institutions, which are growing in importance as we strive for a global financial system that minimizes centralization and control manipulation for geopolitical gain.
In the coming years, it’s anticipated that blockchain technology will become pivotal in worldwide payment systems, especially when it comes to remittances. As this technology advances and regulations adapt, more and more businesses and individuals might choose to conduct transactions using blockchain platforms instead of conventional methods.
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2024-08-30 20:22