Why blockchain technology is necessary for cross border payments

Blockchain technology is essential in our daily lives, including supply chain management, automobile, food, agriculture, and banking. One of the greatest uses of blockchain technology is cross border settlements. Bitcoin is the first cryptocurrency, and many people are using Bitcoin for cross-border transactions. Many people are using Bitcoin for cross border transactions to dodge government sanctions. For example, in Nigeria recently, people are using Bitcoin to buy goods from China because the naira/dollar rate fluctuates between the banks and the parallel market. 

The challenge with Bitcoin is that the transaction is often slow. It takes up to ten minutes to complete a Bitcoin transaction, and the fees are also on the high side when you compare to other cryptocurrency like the XDC network and XRP. It is a proven fact that Ethereum cannot be suitable for cross border traction because of high gas fees at peak times. For a blockchain technology project to be considered for cross border transactions. We need a fast and efficient payment network.

Is blockchain technology ready for the challenges yet

The US dollar is majorly used for world cross border transactions. The US dollar is still inefficient because many countries rely on US banks to complete transactions even if the trade doesn’t involve the United States. It concentrates the power to them, and they control what is happening to most of the countries. Which means they can sanction their enemy countries from global trade. Blockchain is a decentralized system in which everyone has control of their trades. But the argument for blockchain as a means of cross-border transaction is still irrelevant when a transaction takes several minutes, and transaction fees are extremely high. Blockchain must present an efficient system with low transaction fees and fast to ensure that we can create a truly decentralized system for cross-border transactions.

Improved blockchain network for cross border transactions

A Blockchain technology transaction that will be suitable must be truly decentralized, fast, and has low fees. Many blockchain projects do not fit all the criteria, but a project offers the three characteristics of an excellent cross-border network. The name of the project is XinFin.

Xinfin offers high-speed cryptocurrency payment systems that facilitate cross-border transactions within a few seconds; for example, Tradefinex platform real-time cross-border payments and settlements via XinFin’s XDC network. XDC tokens allow the transfer of funds using DLTs using multiple synchronized ledgers and numerous processing nodes, reducing the risk from a single-point-of-failure.

XDC Community member Mr.Rushabh Parmar from XinFin Says,

 “Blockchain technology provides a cheaper option to the large unbanked population to start using wallet technology without setting up a physical bank or ATM setup. Pandemic like Covid19 provided a boost to the usage of wallet technology. XinFin Network enables the option to avail technology to mass by providing near-zero fees, 2 second transaction time, and smart contract support provides options like escrow or recurring micropayment at near-zero transaction Fees.” 

Conclusion

Blockchain can remove the dominance of the US dollar for cross-border transactions but his development cannot happen if blockchain transactions are slow and fees are high. A truly decentralized system that solves all these problems means that Blockchain can remove the dominance of the US dollar by creating a truly decentralized blockchain cross-border payment system.