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Bank VS Crypto Payments
The modern payment services market is a huge industry, most of which is divided between several major players: mastercard, visa, american express (amex), paypal and others.
These players account for the majority of financial transactions, and therefore they are entitled to dictate their terms, although cryptocurrency competition forces them to become more friendly to end users, they are not yet ready to give up certain things.
For example, from an excessive number of intermediaries. Thus, a typical financial transaction using a card requires the buyer to authorize the seller to "withdraw" money from his account, passing through several intermediaries.
Since the blockchain itself can be a source of truth, that is, it can confirm the integrity of a transaction, payment systems based on it do not need intermediaries. Therefore, the buyer and the seller can make a direct transfer of funds (peer-to-peer payment) and the system will save the transaction data. However, unlike traditional transfers with intermediaries, this data will be 100% accurate and authentic.
- reduces time to resolve and reconcile disputes;
- reduces capital requirements for cross-border transactions;
- provides end-to-end transparency;
- reduces costs at each stage;
- simplifies transactions.
Blockchain allows transactions to be performed much faster than is possible in traditional centralized systems, due to which hackers will have less time for unauthorized intervention and redirecting payments or collecting information about transactions.
Each entry in the blockchains journal after verification becomes an irrefutable and unchanged part of the chronological history of the ledger, a copy of which all network members have. The only way to change the data is to access a copy of the blockchain of each participant at the same time and make the same changes to each.
reduce fraud, ddos attacks, personal data theft; reduce the cost of transactions and associated costs connected with the workflow, audits and bug fixes; promptly eliminate errors and inaccuracies, such as inaccurate addresses, lack of data, making payments on incorrect data; speed up payments, especially cross-border payments and those that were previously delayed due to errors and inaccuracies. Transaction Speed
Cash transactions within one country are quite fast, one or two minutes. This speed is more than enough for the private sector (purchases, payments, transfers) and for business. However, as soon as money needs to be transferred from one country to another, difficulties arise. Such an operation takes 15 days.
The low speed of international transfers is due to the fact that money passes through several intermediaries, which theoretically should reduce the likelihood of losing money or user data (and also to earn more money on commissions).
Even the rather slow bitcoin blockchain allows you to transfer funds from one country to another within a few hours. If the transaction is carried out through the lightning network, then its speed will be reduced to a few thousandths of a second. At the same time, to change one transaction in the bitcoin network, you need to spend more than 7.5 billion dollars (a similar attack on ethereum costs more than 600 thousand dollars).
The cost of a conventional banking transaction within the country wavers around 13% of its size, if these are payment transactions - 0.10.5%, cross-border - 310%. If the money transaction is carried out through digital payment systems, such as paypal, the commission will be from 1.9 to 3.4% depending on the amount of the transaction (+ the cost of transferring money from paypal to fiat).
How it will be with the blockchain. The blockchain-based payment system reduces the number of intermediaries; therefore, the amount of their commissions can be deducted from the transaction cost. In addition, the transition to the blockchain reduces transaction costs, which further reduces transaction costs. In common, this can reduce the cost of any money transfer to 0.001-0.1 of its size.
If you use cryptocurrency for money transfers, then the price of such a transaction will be even lower. However, it is necessary to add to it the cost of converting cryptocurrency to fiat (from 0 to 10% depending on the fiat currency, cryptocurrency and the selected exchanger), which will slightly increase the costs. However, the size of these costs will decrease over time as the market for cryptocurrency assets.