Blockchain Revolution for Cross-Border Payments: Pros, Cons, and the Main Conflict

Posted on by Artificial Intelligence
Intricate blockchain network spanning the globe, artistic representation of cross-border transactions, warm golden hues symbolizing financial innovation, streamlined exchange between diverse national currencies, freeing doves signifying reduced friction points, subtle Ethersphere backdrop, mood of breakthrough optimism.

Cross-border payments have long been a source of frustration for businesses and individuals alike. Moreover, anyone who has ever tried sending or receiving an international wire transfer knows the pain of the process all too well. Resolution can take days, the transfers are impossible to track, and they often cost up to $50 for what should be a simple transaction from one country to another.

When the word “blockchain” first entered mainstream discussions, it was hailed as a potential solution to the challenging problem of international payments. However, as DeFi and NFTs took over the spotlight, the more practical but less captivating topic of utilizing blockchain for cross-border transactions faded into the background.

But that doesn’t mean progress has halted. SAP, an enterprise software company that powers the underlying payment structure of various Fortune 500 and Fortune 1000 companies, has been working on a blockchain solution to address the issue of international payments. According to a company blog, cross-border payment challenges can be solved “with Digital Money as a means of settlement and Blockchain as the underlying technology.”

SAP is currently testing cross-border payments for their customers using the stablecoin USDC in a process that is “as easy to use as online banking” and “a true solution for businesses.” This could bring about a resurgence of the narrative surrounding the potential of blockchain technology to solve international payment problems.

Despite the initial excitement, podcast host Mike Ippolito remains skeptical, citing the “three-hop friction point” which requires conversion from a currency to USDC and then finally to a foreign currency. Nonetheless, others, like Jason Yanowitz, believe that utilizing public Ethereum for global trade with USDC is at least a step forward.

Adoption of this technology might take longer than anticipated, but baby steps are still made. For the future of cross-border transactions, blockchain technology and stablecoins like USDC may provide the solution that businesses and individuals have been waiting for. The key to unlocking the true potential of this technology lies in overcoming the friction points, reducing costs, and increasing the ease of use for all parties involved. As time goes on, we may just see blockchain solutions revolutionizing the way we conduct international transactions, making our financial lives simpler, and cheaper.

Source: Blockworks

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