Since the moment this technology was created, it has become clear that the most important application of blockchain is in finance. Now, when trading, exchange transactions, and cross-border transfers account for the bulk of the blockchain technology market, the security issue arises for everyone who encounters cryptocurrency transactions.
The stereotype, which is usually based on outdated information, creates the following chain of associations: new technology, financial Wild West, ICO scum, hackers who steal crypto – and this is permanently associated with blockchain.
Nevertheless, in reality, blockchain technology adapts quite quickly. The financial part of the technology has independently adopted the security schemes of the traditional banking system, which has helped fight fraud very effectively. Two-factor authentication, cryptographic keys, and escrow accounts have become mandatory and are already perceived as integral parts of blockchain.
Blockchain and the traditional financial system are actually interconnected. When the security issue was resolved, financial blockchain came to grips with the accessibility issue. Then it became obvious that the most remarkable opportunities open up at the junction of the traditional and cryptocurrency financial worlds. The transformation of traditional payment systems is now of greatest interest because money is something that intrigues almost everyone.
So how exactly does the battle between blockchain and traditional finance look right now?
The most significant and interesting changes are happening in the process of global financial infrastructure formation. Ironically, in 12 years of blockchain development, there haven’t been any new global payment systems created to compete with the giants like Mastercard or Visa. Meanwhile, these traditional payment giants are already actively researching the application of blockchain technology. Visa has applied for a patent on its own cryptocurrency system, and Mastercard is encouraging blockchain startups to apply through its recently expanded cryptocurrency cards program.
Some people might ask – that’s great and everything but why do we need these new technologies if we already have traditional banks?
The problem is that even after hundreds of years of operation, the banking system has not become truly global and only works relatively quickly within a few closed regional systems. One of the most popular services like this in Europe is SEPA and in the USA – SWIFT system.
Things get more complicated when it comes to sending money beyond these regions. For instance, payment processing from Latvia to Hong Kong takes three days on average. If you make any minor errors when filling in your information, it will take another three days just to get the payment back to make the necessary changes. After that, you would need to send it again. Every step in this process will cost you around 50 EUR.
Why is it so slow and expensive?
A bank in Latvia, oddly enough in the modern world, cannot transfer this payment directly to another bank in Hong Kong. The transfer goes through a number of intermediary banks, each of which takes time and money.
Blockchain technology is capable of solving this problem, and now the main task is to demonstrate this. The first company to create a global financial blockchain system was the NeuronChain platform. NeuronChain initially positioned itself as a decentralized peer-to-peer network that would solve the problem of financial services accessibility and cross-border payments.
In addition to this, payment institutions around the world face such problems as the need to control AML, lack of trust, and the need to divert their funds to provide transfer services for individuals. NeuronChain has set an ambitious goal to unite the world by providing a decentralized P2P network with the capabilities of blockchain technology that will allow banks to solve the above-mentioned problems. This will allow independent partner banks to make instant cheap payments, regardless of their geographical location, and fully comply with the requirements of the government regulators.
The World Bank’s research has shown that remittances tend to reduce poverty and increase spending on education in low- and middle-income countries, and also significantly reduce child labor and prevent hunger in disadvantaged regions.
Despite the sharp decline in remittances in 2020 due to the economic crisis caused by the COVID-19 pandemic, remittances are expected to become even more important as a source of external financing for the world’s poorest regions.
The main target audience of the new financial network will be those who make such transfers regularly – migrants who help their families and are now forced to give a significant percentage to the payment systems, entrepreneurs who lose efficiency due to huge banking fees, and large companies for whom making payments faster and cheaper can mean millions of dollars in savings.
In 2020, fewer than half of the 270 million migrants worldwide had full access to banking services. At the same time, the international average cost of sending $200 remains as high as 6.8% as of 2020, only slightly lower than in the previous year. It is pretty obvious that the creation of a new global payment system is in demand, and NeuronChain will have to prove its leading position in this race in the near future.
A good basis for this will be the infrastructure that is now being created by the company. In July 2020, NeuronChain announced the opening of the NeuronEx P2P exchange. As part of the NeuronChain infrastructure, the NeuronEx exchange became one of the key links in the peer-to-peer network and allowed users to conduct legal cryptocurrency transactions.
The next step was to develop and implement the Neuron Wallet – a blockchain wallet, which is an analog of a bank account in a traditional payment system.
Blockchain PD Vault technology will give banks access to verified clients (with their consent) and will allow clients to remotely open accounts in any bank in the world.
Synapse Protocol combines the NeuronChain dPay technology, which provides access to instant and cheap cross-border payments to unbanked people, and the NeuronChain dCard technology, which is blurring the line between crypto and fiat money for bank cardholders.
Soon enough it will become clear that these tools help to solve the problem of combining the traditional and cryptocurrency financial systems, allowing fast and cheap cross-border payments and all the other basic financial transactions.
According to the NeuronChain team, the basis of the new system will be the optimal balance of the costs, transaction speed, and decentralization, as well as an unprecedented level of accessibility and security.
In fact, the technology that NeuronChain is actively bringing to the market is beneficial to everyone involved in the transformation of traditional finance. The users will have unprecedented control over their funds, will receive full access to banking technologies, and get control over their assets. Moreover, international business management will become easier and more profitable, as payment processing will be completely transparent, legal, and easy.
Thus, the traditional financial system receives a reliable partner in the field of cryptocurrency finance and the opportunity to form a global payments market. NeuronChain, for its part, gets the opportunity to systematically, consistently, and steadily introduce new technologies and create the basis for the future digital economy, making the world a little bit better.