WaykiChain Looks into Future | Blockchain Application Scenarios in Payment
In the past, people must go to bank or ATM to withdraw, deposit and transfer money. However, with the popularization of electronic remittance channels and the development of third-party payment, more and more people now choose online and mobile bank to transfer money.
What’s more, new payment methods such as WeChat and Alipay have opened the era of modern “no cash” payment.
On May 22, 2010, a programmer in America bought two pizzas worth $25 with 10,000 Bitcoins.
That was the first time Bitcoin was valued with a price. It also proved that blockchain-based cryptocurrency has exchange value in real life.
However what can be influenced the most by blockchain technology are cross-border remittance and payment.
In cross-border remittance, wire transfer is the most common way. But it is expensive and generally will take up to 3–5 working days. In addition to a certain fee charged by the intermediate bank, SWIFT will also charge high telecommunications fee for text exchanges through its system. For example, in China, each cross-border remittance through Bank of China will be charged 150 yuan as telecommunication fee.
Though SWIFT has played a fundamental role in cross-border remittance, its high charge is often criticized.
Besides, customers also need to handle cross-border remittance business at a specific time, input various types of information, go through cumbersome procedures and endure long remittance time, etc., which seriously affect the customer experience.
At the same time, SWIFT is also faced with security issues, payment risks and systemic risks, etc.
Blockchain technology allows remitters to directly pay to and settle with the payees, eliminating all intermediate costs, and complete point-to-point cross-border payment quickly. While improving speed of settlement, 24/7 payment, real-time arrival, easy cash withdrawal can be achieved without any hidden costs.
According to McKinsey, only in B2B cross-border payment and settlement business field, blockchain technology can reduce the cost from $26 to $15 for per transaction.
Under the decentralization mechanism of blockchain technology, users can complete cross-border transfer with lower cost and faster speed. Its appearance seems to coincide with people’s vision. A new payment revolution is ready to happen.
Blockchain’s decentralized technology is the common ground to solve the cost and efficiency problems in cross-border remittance. Instead of relying on a centralized system for funds clearing and information storage, both transaction parties can take advantage of a consensus mechanism that does not require coordination of trust and can directly carry out value transfer.
Cryptocurrency represented by bitcoin is not a counterparty to RMB and any other legal currency. It is more similar to the payment system such as Alipay, a supplement to legal currency, which acts as an credit intermediary in international cross-border payment.
Based on decentralized P2P credit, cryptocurrency breaks the limits of countries and boarders. In global Internet market, it can play high-efficiency and low-cost value transfer function that cannot be replaced by traditional financial organizations.
Everyone’s cryptography wallet can be developed into a “self-finance” platform that can perform P2P payment, deposit, transfer, exchange, loan, and net-book clearing, and issue its own financial contract products and credit notes through Bitcoin, Ethereum, Ripple and other smart currency system.