- Blockchain can speed payments, Binance research says.
- Global payments would be cheaper on blockchain.
- Blockchain may renovate slower, costlier fiat banking system.
Blockchains provide a unified technological landscape that can potentially streamline the global payments infrastructure and surpass the fragmented nature of the modern banking system, according to a Binance research report.
When a transaction is made using Visa or Mastercard, the consumer experiences almost instant payment authorisation, but the actual settlement for the transaction, the moving of funds from the customer’s bank to the merchant’s bank, often does not happen until at least a day later.
Settlement times are even more drawn out when funds need to be moved across borders, as this requires communication between banks from different countries.
Blockchains are more efficient in terms of speed, with transactions settling in less than an hour, the report said. It also noted that blockchain transactions are less expensive than traditional methods of transfer.
World Bank data indicates the average cost of sending remittances across international borders was 6.35% in the first quarter of this year.
Blockchain networks like Solana can enable transactions at a fraction of that cost, moving stablecoins at fees that amount to a fraction of a cent, according to the report, which cited a Visa pilot project that is using blockchains to settle payments.
The report noted that there are challenges of scalability yet to be overcome, as Visa has the capacity to process more than 65,000 transactions per second, while Solana, for example, can handle a little more than 1,000.
Still, the report concludes, as a global regulatory environment coalesces, technology evolves, and companies grow more comfortable with blockchain technology, many may opt to transact in on-chain stablecoins over the slower, costlier fiat banking system.
Crypto market movers
- Bitcoin is down 1.49% today at $58,195.32.
- Ethereum is down 1.62% today at $2,477.64.
