How Do Blockchain Transaction And Payments Work?
25th September, 2018
In the previous article, we defined blockchain as being a digitized, decentralized, public ledger of cryptocurrency transactions. Nowadays, there are several ways to send money from one person to another: using a specific bank or with a money transfer service. In the basic definition, the money transfer represents the act of transferring money from one place to another, electronically or physically. Consequently, when a person transfers funds, the money goes from one bank to another, and then to the person’s account, who is supposed to receive them. By being an intermediate for this transfer, the bank often collects data about your common transfers.
Another option for transferring money from one account to another is by using some other third party services that also act as an intermediary for the transfer. Nevertheless, in either case, someone is still holding onto your information and also, you will be hit with extra fees.
Bitcoin as a payment system
The period between the year of 2008 and 2018- and it still goes on- can be defined as an amazing period of mentions, analyses and debates regarding Bitcoin as a payment system. Integrated in the blockchain technology, this payment system provides a high level of privacy by ensuring that transaction details are shared only with the participants involved in that transaction. Therefore, with blockchain transactions there is no need for a third party.
To explain the blockchain payments in a simple way, the illustrations shows how it really works:
Blockchain technology removes the need for a central authority to manage transactions, making these transactions highly secure and impossible to use by hackers.
Being this secure and safe, the companies that adopt blockchain technology can create irrevocable digital ledger of transactions.
“The technology can be integrated into business processes today, not even in the near future.” says Alexander Borodich, Founder of Universa, a blockchain technology company.
Besides transparency and security, the blockchain transactions are extremely fast. The B2B companies that use this technology will be able to conduct their internal and external transactions faster. Due to automation, employees would no longer have to wait to be paid monthly. Instead, they could be paid even every days, because, using blockchain transactions can make this process easier than the traditional transactions.
Big Financial Institutions Are Using Blockchain Technology
In 2018, major financial institutions are showing an interest in using blockchain technology. Mastercard has launched its own blockchain network for the business-to-business space. Since last year, Visa has also gotten involved with blockchain technology, which now powers its Visa B2B Connect payment platform. Even the credit card company American Express has also added blockchain technology to its payment system.
Experts predict blockchain technology will only get faster as its scale increases. As more companies embrace this technology, B2B transactions at every level will run more smoothly. Essentially, the more widely blockchain is adopted, the better it will become.