Finance

Will Blockchain Payment Solutions Replace Conventional Services?

Cryptocurrencies have countless use cases, but the most obvious and original has always been payment processing. Bitcoin, first and foremost, is digital money, but it functions almost like a messaging app. Bitcoin’s transactions are delivered to digital addresses via a software network that spans the globe.

Bitcoin’s remarkable price history is mostly due to the technology’s success in this area: Bitcoin transactions are 100% secure and (usually) near instantaneous.

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Source: Pixabay

Some other blockchain applications are even better than Bitcoin when it comes to payment processing. Ripple is faster, NEO has 100% finality, and NANO transactions are free.

The question is, will Bitcoin or any of the other cryptocurrencies replace conventional payment processing solutions, like credit cards, PayPal, and the various remittance services?

Perhaps There’s Room for Both

Blockchain may not completely replace conventional payment processing solutions, though it will increase its market share for the next decade at least. Why is this?

According to RealMoney.ca, Interac is one of the most popular deposit methods in Canada across most industries, with its secure and fast payment process making it ideal for markets such as online casinos. This is just one an example of why conventional payment processing has a firm hold on the present market.

Despite the novelty of cryptocurrencies (a popular option for deposits on online casinos and the like), most people continue to use fiat currency for all payments. Blockchain currency users are early adopters – a highly sophisticated, digitally savvy population that is nonetheless not the majority. For everybody else, the ability to transfer cash directly from bank account to payment destination is far more convenient.

Fortunately for cryptocurrency fans, there are numerous other applications for which crypto is superior. Let’s consider international remittances, for example. Blockchains like those introduced by Ripple and Stellar make it cheap and fast to send money overseas.

This has motivated old-style remittance companies like MoneyGram to adopt Ripple technology and for a growing list of international banks to do the same.

Cryptocurrencies also have the capability of rendering transfers anonymous. Fiat currency methods like VISA don’t offer this feature and almost certainly never will. And while it takes some know-how to take advantage of the best crypto anonymity coins (like Monero and Zcash), this opens up a whole new set of possibilities for the way money can be used.

Ignoring the many black-market use cases, privacy coins allow for anonymous donations, the free transfer of wealth out of oppressive governments, and the financing of journalists from anywhere on Earth without setting off public signals.

At the end of the day, though, national governments aren’t going to stop issuing fiat currency, at least not within the next couple of decades. In all likelihood, nationalized currencies will persist for the next century, though cryptocurrencies will likely advance in popularity and function for much of this time.

In the end, expect cryptocurrency and fiat payment solutions to thrive side by side, as the best use for each model starts to be better understood. Of course, cryptocurrency has more room to grow, and decentralized currencies may be the financial story of the next decade.

But if you or someone you know likes fiat, don’t expect it to vanish anytime soon.

Jeremy Banks

Jeremy is a journalist passionate about new technologies. Based in Canada, he spends his time writing about how techs such as blockchain, crypto and AI are changing the way business is done.

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