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Blockchain technology is revolutionizing cross-border payments


Blockchain is beginning to revolutionize the cross-border payment system.

The reality is that the international payment system with classic fiat currencies has more than one flaw in this regard: Cross-border payments are often limited, slow, and expensive.

For example, there is an initial problem with currency exchange when making payments between countries that do not support the same currency.

In such cases, it is often necessary to obtain the currency used by the recipient before making the payment, or use a broker to convert the currency.

These processes inevitably make the process slower, longer and more expensive, especially where intermediaries are needed.

With blockchain payment systems, on the other hand, it is possible to manage everything without intermediaries, although there is still no system that works on a large scale and with enough history to be considered safe.

In other words, blockchain-based systems that allow multi-currency payments widely used today are centralized or require the intervention of an intermediary.

However, thanks to DeFi and the stable coins backed by fiat currencies, for example, it would already be technically possible to create a decentralized multi-currency payment system without intermediaries.

Actually, these systems already exist, but so far they only involve a handful of fiat currencies and have very little history to be considered secure enough to be widely used worldwide.

For single currency payments like dollar or euro, or bitcoin or USDT, blockchain based solutions are now available.

In particular, they are the Stable currencies, like USDT, which enable fast, cheap and unlimited payments worldwide.

In fact, genuine cryptocurrency payments, such as BTC or ETH, are not yet particularly widespread, because they are not yet commonly accepted as a means of payment due primarily to their volatility.

But given the ease with which it is possible to exchange, for example, US dollars to USDT, stable currencies are more easily accepted and can move around the world as quickly and cheaply as any blockchain payment.

For example, a USDT transaction on Ethereum takes about 14 seconds to confirm and costs less than half a dollar on average. This is always the case, regardless of who the recipient is or where they are located.

As a result, cross-border payments on blockchain become extremely competitive , compared to classic fiat currency transfers, and without the risk associated with cryptocurrency volatility, as on average $ 1 for example is worth exactly $ 1.

In addition, there are also other stable currencies pegged to the dollar or other fiat currencies such as USDC or DAI. These are easily exchangeable for fiat currencies on the most common exchanges, so both those who need to make a payment and those who need to receive it should have no particular problem exchanging them for fiat currencies in a common public exchange, provided they are able to justify the origin of the funds.

According to deloitte research, B2B cross-border payments on blockchain could lead to a cost reduction transaction rates between 40 and 80%, and it could take an average of 4-6 seconds to execute, compared to 2-3 days for standard processes. The tools to accomplish this are already in place, and it may take many years before they are implemented, making traditional ones completely out of date.

A very important step in this direction could be that of PoundFor example, it could make international payments to Facebook users easy, fast and cheap, but also Visa seems to be studying a similar solution.

Therefore, many companies are already experimenting with these new technologies to achieve, or even exceed, the goals set by Deloitte some time ago, while, on the other hand, DeFi is demonstrating that an almost completely decentralized international and multidisciplinary system could exist. of currency payments even tomorrow.

This is a revolution that is already On the go, at an advanced stage of experimentation, although it is not yet ready to dominate the markets, it may nevertheless take a long time before this happens.

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