Impact of blockchain technology on modern payment systems

Opinion: Alexey Nasonov, CEO Worldcore: Impact of blockchain technology on modern payment systems

According to Google Trends data, starting in late 2017, bitcoin and, subsequently, blockchain architecture have become one of the most trending internet search inquiries. People from all over the globe are searching online for answers to the questions of what bitcoin and blockchain are and how to use them to earn money. The subject of cryptocurrencies has become super-popular, earning a Google Trends rating of 100% in 2017. In the Russian internet segment, over 2.7 million users per month search for ‘bitcoin’, and over 200,000 – for ‘blockchain’. All of the above indirectly testifies to the fact that cryptocurrencies and related technologies are not merely of interest to the public, but are gradually permeating our everyday lives.

According to Google Trends data, starting in late 2017, bitcoin and, subsequently, blockchain architecture have become one of the most trending internet search inquiries. People from all over the globe are searching online for answers to the questions of what bitcoin and blockchain are and how to use them to earn money. The subject of cryptocurrencies has become super-popular, earning a Google Trends rating of 100% in 2017. In the Russian internet segment, over 2.7 million users per month search for ‘bitcoin’, and over 200,000 – for ‘blockchain’.



All of the above indirectly testifies to the fact that cryptocurrencies and related technologies are not merely of interest to the public, but are gradually permeating our everyday lives.

Over time, the development of the Internet has affected banks’ operations as well. For instance, there’s now an exclusively online bank in Russia – Tinkoff bank. The very process of conducting and processing transactions is growing increasingly quicker and easier with each passing year. Payment systems assist us in spending greater amounts of money faster, thus lending a shoulder to the consumer society. It is already apparent that blockchain technology will simultaneously affect both modern payment systems and payment instruments. While during the making of the internet such changes may have taken a decade, everything is faster in the blockchain era, and things may change in just a couple years.

Undoubtedly, blockchain will destroy or entirely transform the payment systems that we are all used to. Everything that presently seems correct and immutable may transform entirely over the course of merely 5-10 years. Contemporary payment systems, such as SWIFT or SEPA, are based on the presence of intermediaries that act as regulators or trusted centers, complicating payment infrastructure and slowing down the very process of monetary flow through countries and continents.

The possible emergence of a new transaction format, which was first heralded in late 2017 – early 2018 by the RippleNet – xCurrent, XRapid and xVia technologies, was predicted by crypto-evangelists as early as several years ago, when blockchain technologies still remained the lot of a few IT professionals. The appearance of a large number of cryptocurrencies and exchange platforms allows people with no previous experience in conducting financial transactions due to their high costs, to carry them out quickly and easily.

Just compare: the European round-the-clock instant transaction SCT Inst (SEPA Instant Credit Transfer) system, comparable in efficiency with blockchain transactions, was implemented only in late 2017, despite the fact that the work on implementing such a project has been initiated by Eurobank as early as 2014. It required the development of new standards, participation of European financial institutions in the project development, approval of the financial micropayment system at the European Payment Union level. The development of the NPP (New Payments Platform), which provides similar services in Australia, took twice as much time – almost 6 years!

In the three years that it took SCT Inst to emerge, several revolutions occurred in the world of cryptocurrency, namely, smart contracts, creation of distributed applications, explosive growth of market capitalization and the infiltration of the Internet of Things by blockchain. Considering the financial and time expenditures of traditional technologies, it is apparent that the next stage in the cross-border payment system development will entail their implementation on the basis of blockchain technologies. Whether it will be Ripple, its lesser known twin Stellar, or some other new token on a still inexistent blockchain platform with, perhaps, a modified, unreliable, but extremely fast Hashgraph consensus – none of that really matters, but as a result we will still get:

  •  Lower commissions and transaction costs
  • Storage of transaction data
  •  Audit facilitation
  •  Investments in cryptocurrencies, which will lead to a decrease in volatility and an increase in capitalization of the entire cryptocurrency market
  • Unlimited transactions throughout the world
  •   A higher level of cybersecurity
  • Low or zero audit cost
  • Greater cooperation between financial institutions