30 Jan 2025
You are definitely living under a rock if you haven’t heard of cryptocurrencies yet. According to a report by CoinMarketCap, there are more than 21,910 cryptocurrencies with As of January 2025, the cryptocurrency market valuation has surged to approximately $1.2 trillions. Very soon, cryptocurrencies and the technology of blockchain will take over the money transfer industry. Recent studies indicate that around 15% of the global population now owns some form of cryptocurrency.
Let’s see where blockchain technology is headed and how it can be beneficial for the general public.
A blockchain is a fairly new technology that works through a shared distributed database or ledger between computer network nodes. It essentially serves as an electronic database for storing data in digital form. The most popular and crucial use of blockchain technology is for preserving a secure and decentralised record of transactions in cryptocurrency systems like Bitcoin. The most important part of a blockchain is that it fosters credibility without the necessity for a reliable third party by ensuring the integrity and security of a record of data.
The way the data is organised in a blockchain is greatly different from how a normal database is usually organised in regular systems.
In a blockchain, there are several groups called blocks that, each include a plethora of data. These Blocks have specific storage capabilities, and when filled, they are sealed and connected to the block that came before them to create the data chain known as the blockchain.
The major difference between this new technology and the old one is that a blockchain, as its name suggests, arranges its data into pieces (blocks) that are strung together, whereas a database typically organises its data into tables. When used in a decentralised way, this data structure creates an irreversible chronology of data by design which can be extremely beneficial in a number of cases. When a block is completed, it is irreversibly sealed and added to the timeline, meaning it cannot be changed.
Blockchain aims to make it possible to share and record digital information without any external edits or controls. A blockchain serves as the basis for immutable ledgers or records of online money transfers that cannot be changed, removed, or destroyed. This is the reason why this technology is also popularly referred to as distributed ledger technologies(DLT).
There are now several blockchain-based B2B payment processing systems available throughout the globe, and more are on their way to becoming life in the coming years. The latest trends in blockchain technology include Decentralized Finance (DeFi), Non-Fungible Tokens (NFTs), Blockchain Interoperability, and Scalability Solutions. A group of banks in Japan intends to launch a blockchain-based payment processing service that will enable real-time local and international payments at a cheaper cost than currently available options.
Bitcoin recently crossed the $100,000 mark in December 2024, following significant political and economic events. Some of these are created specifically for the comparatively tiny fraction of companies that deal with Bitcoin directly. However, some payment processing options reach a considerably wider audience by transferring payments in digital currencies over the Bitcoin distributed ledger. They can do this to avoid the current banking system, which speeds up payments and lowers costs. International payments are frequently sent within one to three days when the provider transforms the payer's local currency into Bitcoin and then converts the Bitcoin into the receiver's local currency.
By employing this technique, BitPesa in Kenya enables businesses to send payments more quickly and inexpensively between African nations without depending on sluggish and ineffective local banking infrastructure.
One of the latest trends is the adoption of CBDCs by central banks, with 130 countries showing interest in this technology. If the money transfer industry shifts to blockchain technology, the following benefits will be observed.
Traditional payment systems incorporate centralised institutions like the government, commercial banks, and the central bank. Through their own systems, these strong entities are able to completely manage all of your actions and all of the information. They have the freedom to provide information to anyone they choose at any time. These authorities have a lot of authority, but great power also comes with tremendous responsibility, and if that power is mishandled, it could damage confidence over time.
Some people in less economically developed nations don't even have access to a bank account, making it impossible for them to save money, make investments, or send money. 70% of adults in Africa don't have a bank account. However, using cryptocurrency to make payments eliminates the requirement for a bank account.
Global customers and businesses benefit from the increased security and transparency offered by blockchain payment solutions. This is due to the fact that all transactions are visible to everyone and cannot be changed once they are entered into the system.
All Sorts of Transactions Will Complete Within Seconds
Blockchain payment solutions enable speedier transaction sending and receiving across international borders. Due to their weak infrastructure, conventional payment methods are unable to keep up with this speed. Blockchain technology is secure and transparent since it uses a peer-to-peer approach. Due to the expedited approval procedure with blockchain technology, money transfers are much speedier.
Since banks use a centralised system, they need a lot of commission. The operating and ongoing costs of centralised systems are substantial. Project costs, security expenditures, and staff costs are a few examples. In comparison to a decentralised system, operating and covering costs in a centralised system is more expensive.
There are no employers or workers in a blockchain-based payment system. On the site, there is only one group of users who cooperate and abide by the regulations. As a result, expenses are cheaper, and commission fees are lower.
To secure consumer data, traditional systems like banks typically implement rigorous security measures within their organisations. For instance, they create servers, security teams, and control teams, all of which have a significant impact on how they manage their budgets. For older systems, maintaining a high level of security and information protection is expensive.
Once it's in the system, blockchain is secure by nature. As a result, the system doesn't require any additional security measures, making it significantly less expensive than the conventional payment system.
Systems for making payments on the blockchain are getting stronger over time. The traditional payment system may be disrupted by blockchain if the rumours are to be believed. We can only hope that if a blockchain payment system is established, it will help revolutionise the future and promote real change so that payments are quicker, more secure, and more dependable.
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