Global payments system faster, cheaper, greener and safer with blockchain
As the adoption of cryptocurrencies continues to grow and central banks across the globe strive to develop their own digital currencies (CBDCs), blockchain will irreversibly shake up the global payments system for the better.
For the first time, the U.S. Federal Reserve has launched an extensive discussion paper that will act as the basis for a debate about the introduction of a digital dollar. Yet the U.S. is trailing China in this regard, which is already piloting a digital renminbi. Substantial progress has also been made by the European Central Bank towards a digital euro, the Bank of England has invited comments on a recent discussion paper, Sweden has completed a technical pilot and, leading the way, the Bahamas has introduced the world’s first CBDC.
As I was quoted by Bitcoin Insider, amongst other media, what we’re seeing now is Bitcoin and other digital currencies are reaching the point of critical mass, which is the moment when a new way of doing things crosses a threshold and takes hold.
The majority of governments across the globe have already recognised that digital is the inevitable future of money. The transition towards digital transactions has been happening for years but has since sped up since the pandemic.
As such, for this reason, and due to the fact Bitcoin and other cryptocurrencies are out of their control, the race is on to launch their own digital currencies.
Undoubtedly, demand is growing for digital assets from governments and their agencies, businesses and institutional and retail investors. Yet, as well as the existing demand, harnessing the power of blockchain will really fuel the rise of digital payments.
According to recent research by the Bank of Estonia, amongst others, ongoing blockchain technology developments will lead to a faster, more powerful payment system than the card payment and instant payment systems currently used around the world.
Furthermore, the findings showed payments made with this tech used less energy than credit card payments by a factor of 1,400.
Blockchain also provides key opportunities for reducing costs and enhanced security, for financial institutions and users.
Indeed, major financial institutions, such as banks, could potentially slash tens of billions of dollars every year utilising distributed ledger technology by decommissioning legacy systems and reducing operating costs.
Whereas consumers could see expensive global remittance costs all but removed.
In addition, perhaps the strongest benefit that blockchain offers institutions and consumers is against theft and fraud. Funds can be tracked on a tamper-proof ledger, which is a powerful, preventative security measure.
Of course, blockchain is still an emerging technology and it may take five to 10 years to hit ultimate maturity. Yet, considering the super-fast pace of blockchain innovation and adoption across every sector, it is set to permanently shake-up the global payments system. It will support a payment system that’s faster, greener, cheaper and safer than the current systems, and consequently, will be the principal driver for the forecast global surge in digital transactions.
Indeed, blockchain’s revolutionary influence will change how we make payments and do business forever.