A recent research report by Binance suggests that blockchain technology could revolutionize the global payments system and provide a more modern and efficient alternative to the fragmented banking infrastructure that currently exists.
According to the report, while payment authorizations via traditional methods like Visa or Mastercard may seem instantaneous to consumers, the actual settlement of funds between banks can take up to a day. This delay is even more pronounced for cross-border transactions that require coordination between banks in different countries.
In contrast, blockchain technology offers a significant improvement in transaction speed. The report highlights that blockchain transactions can be completed in less than an hour, in stark contrast to the delays associated with traditional banking methods. In addition, blockchain transactions are relatively inexpensive, offering a more economical solution for global money transfers.
Data from the World Bank shows that the average cost of sending cross-border remittances in the first quarter of this year was 6.35%. Blockchain networks like Solana could significantly reduce this cost and enable transactions to be made for a fraction of a cent. The report points to a Visa pilot project that uses blockchain for payment settlements, demonstrating the potential of the technology.
Despite these advantages, the report acknowledges current challenges, particularly in terms of scalability. For example, while Visa can process over 65,000 transactions per second, blockchain networks like Solana currently process just over 1,000. However, the report remains optimistic, suggesting that as regulatory frameworks improve, technology advances, and businesses become more comfortable with blockchain, adoption of on-chain stablecoins over traditional fiat banking systems could increase.
*This is not investment advice.
