Blockchain starts to revolutionize the system of cross-border payments abolishing the traditional models.
Crypto exchanges are disrupting the old financial systems The reality is that the international payment system dealing with traditional fiat currencies has more than one drawback: the cross-border payments are often limited, slow and costly.
For example, there is the initial problem that is when exchange is made between countries that do not support the same currency. In such cases it is often required to get the currency used by the recipient before making payment or to attract intermediaries for currency conversion. And this is what inevitably makes the process slower, longer and more expensive, especially if intermediaries’ participance is required. On the other hand, the process can be managed with the help of blockchain payment systems without intermediaries.
Still the systems that would deal with large data and provide enough security have not been developed. In other words, blockchain-based systems for wide use of multi-currency payments are currently either centralized or require intermediaries. But due to DeFi and stable coins, it is technically possible to create a direct decentralized system of multi-currency payments. Such systems already exist but they still include only a couple of printed coins and cannot be considered to be secure enough for being used all over the world.
As for one-currency payments such as that involve euro, Bitcoin and US dollar, the blockchain solutions are already available.»] In particular, such stable coins as USDT ensure quick, cost-effective and limitless world-wide payments. Indeed, the true crypto payments such as BTC or ETH have not been widely spread because they are not generally accepted as a mean of payment, mainly because of high volatility. But considering the simplicity for exchanges like ‘crypto — US dollar’, stable coins are better accepted and can be moved around the world as quickly and cost-effectively as any other blockchain payment. For example, confirmation of USDT-Ethereum transaction takes about 14 seconds, and on average it costs less than half-dollar. This is always so no matter who the recipient is and where he/she locates.
As a result, the cross-border based on blockchain are becoming highly competitive in comparison with traditional fiat currencies exchanges and have no risks associated with volatility as $1 would cost, on average, 1 USDT.
Besides, there are some other stable coins tied to dollar or other currencies such as USDC or DAI. They are easily exchanged for printed fiat at popular exchanges, this is why both sides of transaction should have no significant troubles. From experiments to practice According to Deloitte research, B2B cross-border payments on blockchain May help to reduce the transaction fees by 40-50%, while the transaction itself will take just from 4 to 6 seconds while the traditional exchanges take 2-3 days. Some of the instruments required for such systems already exist, and only a few years may pass before they are fully integrated which would make the traditional models outdated. One of the important steps in this direction may become Libra that would make international payments for Facebook users easier and cheaper. It seems that Visa is now working at similar initiative.
Still the revolution has already started within the advanced experiments, although it is not ready yet to dominate on large markets. But it will only take a while.
