The Blockchain Ecosystem and Finance Industry
The root of blockchain evolution. Back in 2008, during the housing industry breakdown, the concept of independent currency was implemented. With the harmony of cryptography, economic game theory and peer-to-peer network i.e. the internet, Bitcoin, the blockchain based currency was created.
From then to now, the blockchain ecosystem evolved into decentralized services for banking, affecting the mainstream public of the world in passive and active manner.
Global Crossborder Payments
Global crossborder payments require multiple entities to involve in the transactions, leading to upwards of 10% in transaction fees. This inevitably happens since each entity involved maintains secure records and generates reports for compliance.
For an e-commerce cross-border transaction, routing, processing and approval takes place. Sender’s credit card information is captured by the payment gateway, which subsequently forwards the transaction information to the receiver’s bank. Receiver’s bank then creates approval request to sender’s bank. Based on funds available in sender’s account, transaction value and currency-matching, the bank approves or denies the request.
The footprint of currency: Sender’s Bank > Local Clearing Network > Correspondent Bank > Payment Gateway > Correspondent Bank > Local Clearing Network > Receiver’s Bank
Blockchain infrastructure eliminates intermediaries by creating common link between banks. The immutable nature of blockchain allows banks to rely on a single, shared database, which keeps the record of bank-to-bank transactions.
International Crossborder Transactions