How Blockchain is transforming payment transactions
Blockchain technology revolutionized the financial industry with its digital ledger transaction system. It is connected to a network of computers and creates a chain for each transaction carried out. It encrypts these transactions with a cryptographic signature known as a hash.
Many technology communities use Google Docs as an example of how it works. Documents shared with a group of people can be accessed at any time, making operations flexible, fast and cost-effective. This flexibility is why many online gambling platforms have used Blockchain technology in their payment systems. The system works through three concepts: blocks, nodes and miners. These systems help it create more blocks containing the transaction data while miners create new blocks through mathematical processes. Nodes, on the other end, allow the interconnection of each block.
All of these make it easy for players to facilitate payments when playing blackjack online and other internet transactions conducted through any cryptocurrency. It also makes it easier to meet all virtual payment requirements and optimize crypto accounts for financial success. This article looks at several ways Blockchain technology is transforming digital transaction systems.
5 Ways Blockchain is Transforming Payment Transactions
Many people want to buy and sell online. The rise of those inclined to shop and pay online has increased, and so have the measures to protect them. This is how Blockchain technology does it:
- This makes it easier to pay across national borders
Transferring payment through banking systems is complicated as your money has to go through several processes. For example, if you live in the United States and want to buy a product from China, you have to pay through American banks that work with Chinese banks to finance the company.
That means you need a third-party system. You pay to the supplier’s bank account, but in reality the money has gone through your bank, down to a partner bank in the recipient’s country, and then down to the recipient’s bank account.
The way it works, Bank A (your bank) receives the money. If it is not licensed for international transactions (or has not reserved Chinese Yuan), it will send it to another bank, which will then send your money to the Chinese bank. It is Bank C. Bank C (if it is not the recipient’s bank) will then process it to the recipient’s bank, Bank D.
The complexity is why payment sometimes takes days. Blockchain eliminates this as each transaction is processed directly without the government or banking authorities. You cannot reverse it; there are no delays and these costs are at the barest minimum. The cost-effectiveness of the process also means that your money can take as little as 15 minutes to reach the recipient, and you have access to it 24/7.
Every buyer and seller is aware of cybercrime. It is the terror that plagues online payment systems today, and is even said to cost people and businesses over $500 billion annually. That is the GDP of Algeria and the Philippines combined (as of 2020). Banks’ security measures can’t keep up with phishing emails, bugs and other cyber-attacks, and that’s where Blockchain comes in.
The system protects all transactions through cryptography and distributes the data to several ledgers. Any hacker would have to change these transactions (secured by blocks), which is almost impossible. Apart from this, it is rare to find leaks in your private data because you are assigned encrypted keys such as account numbers.
These keys also change frequently, making it nearly impossible to identify or exploit in any way. And since the transaction is instant (with no more than one hour during heavy traffic), it is difficult for hackers to divert your money.
- Transparent payment systems
It has already been stated that the system keeps track of all transactions. These records are maintained by a network of computers, a central institution, which cannot be changed by individuals or authorities. There are identical ledgers everywhere. They create the illusion of trust, decentralization, transparency and immutability for hackers.
There is consensus across the network of nodes, making it easy to verify each transaction as blockchain processes. It also means that you cannot change the data that has already been processed and each business can maintain customer information without any problems.
Since you cannot change the records, each transaction remains as it was. That means the Blockchain ecosystem protects both parties and guarantees trust. It also means that anyone, regardless of financial power or connections, can do business anywhere in the world without discrimination.
- It allows investment and trading of cryptocurrencies
The average tech-savvy person understands that they can invest and trade in digital currencies. These are the likes of Bitcoin, Ethereum, Ripple, Dogecoin, XRP, Litecoin, Tether, Solana, TRON and many others.
This means that you can invest in the value of these currencies, and your investments increase as the currency’s values rise. It also means that you can choose to exchange these currencies for another cryptocurrency while pocketing the extra on the transaction.
Blockchain facilitates a monetization system through its highly secure financial services network. It’s like investing in dollars or pounds or trading in dollars, Japanese yen or European euros. You then take advantage of the differences in the exchange rate to make money.
- Privacy and protection
All bank account information is held on the private server of the bank. Your privacy ends when the bank servers are penetrated. It ends in reality when any bank officer gets access to your file, even if it doesn’t compromise your information.
It is different with Blockchain or any of the cryptocurrencies it powers. Although all transactions are traceable, it is difficult to know who owns them, meaning that your details are private to you, unless you leak them.
Opening a bank account means you are vulnerable to the government’s Know Your Customer (KYC) laws. These laws mean they can track your account and seize your assets for reasons they know. However, it is impossible to do this through Blockchain as it would use valuable time and resources to track an account.
Everyone wants to buy and sell online, but the challenge is cyber security. However, blockchain technology is revolutionizing the financial industry by transforming payment transactions. It provides more security, transparency, privacy and protection and simplifies payments across national borders.