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- 1 Blockchain is a digital ledger which maintains data in an encrypted database.
- 2 Banks and online payments apps can largely benefit from blockchains.
- 3 Institutions are adopting blockchains for launching new services.
From movies to real-life, blockchain is becoming increasingly popular, especially in the monetary services. Payment applications generated a total of 44% global blockchain revenue in 2022 alone, and it is estimated that by 2023, this number is going to increase and reach to about $1.4 Trillion.
What is Blockchain ?
Blockchain refers to a distributed database shared among the node which is a computer connected to a network. “Validators”, also called “miners” approve these transactions and then reach an agreement using a dedicated set of rules.
“Block” consists of transactions which are approved and are tied together, i.e., creates a series of blocks which is then called “blockchain” and it is protected by keys which is only accessible to limited users.
Following are the two types of blockchains-
- Public blockchain: The blocks are visible to all the users which have access to the network but not the contents present inside the blocks which ensure privacy .
- Private blockchain: In these types of blockchains, the information inside the block can only be accessed by approved users.
Blockchain and the Traditional Banking System
Currently, the banking sector has become stagnant even though it is advancing at a fast pace. The answer for this is they are not open or rather slow for innovation. It still requires paperwork and millions and trillions of dollars gets wasted in the processing fees. However, cryptocurrencies like Bitcoin and Ether are public blockchains where you can transfer and receive money in real-time with no processing fee which makes the whole process cheaper .
Blockchains also make the process speedy comparatively since banks require intermediaries to transfer money from bank to the recipient. Blockchains eliminates the intermediaries and works on a more transparent, public and secure database. It also eases the KYC process.
Blockchain and Online Payments
Blockchain benefits both multinational companies which deal with different types of currencies at different rates as well as small businesses who face difficulty settling their payments. With Blockchain, they can level up faster in the digital space. As mentioned above, blockchains make the process speedy and no extra transaction fee is charged which also applies here.
Moreover, mobile payments and transactions have now become big data, i.e., companies have more data than they can process, so blockchain manages the large flow of currency with ease and people are now open to this change.
Nowadays, organizations and banks like J.P. Morgan, Swedish Central Bank and HSBC are relying on blockchains for various purposes: be it improving money transfers, releasing its own digital currency or digital vault. With the power of blockchains, financial institutions are exploring as well as launching new services to facilitate the transactions in the future.
Though it is a slow process, it is definitely a thing to watch out for in 2023. and further because in the coming future, it will definitely revolutionize payments.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
