5 Benefits of Blockchain –Everything You Need To Know About BLOCKCHAIN TECHNOLOGY, OVER MORE THAN A DECADE OF ITS EXISTENCE, HAS TRAVELED FROM BEING A DISRUPTIVE FORCE TO A FOUNDATIONAL BEAM SETTING UP THE INFRASTRUCTURES IN VARIOUS INDUSTRIES AND SECTORS. ANY PROCESS THAT HAS THE POTENTIAL TO BE DECENTRALIZED CAN GET BENEFITS OF BLOCKCHAIN. BLOCKCHAIN REFERS TO A DISTRIBUTED DIGITAL LEDGER OVER A NETWORK OF COMPUTERS CALLED NODES. IT CAN ALSO BE CALLED A PEER-TO-PEER NETWORK WHERE NETWORK PARTICIPANTS ENGAGE DIRECTLY WITHOUT THE INVOLVEMENT OF A THIRD PARTY OR A CENTRAL AUTHORITY. CRYPTOCURRENCIES LIKE BITCOIN, LITECOIN, BITCOIN CASH, RIPPLE, ETC., HAVE PROVED THAT BLOCKCHAIN ADVANTAGES CAN BE BEST UTILIZED IN FASTER PAYMENT PROCESSING, INCLUDING OTHER MULTIPLE USE CASES. LET’S DISCUSS.
Blockchain in Payment Systems
Blockchain has established itself as a very useful technology in today’s time. It can facilitate faster payment processing since it is a new and improved way to build databases.
It is also a very secure network where the information is genuine, and one cannot enter a blockchain or retrieve its data without the consent of other users.
This is possible due to how a blockchain network is laid out in the form of “layers.”
What are the Benefits of Blockchain?
A decentralized and immutable ledger that facilitates the process of recording transactions and tracking assets – the very structure of blockchain makes it incredibly useful in the modern-day world. One of the most important benefits of blockchain is its role in payment processing. Allow us to break down the five primary benefits of blockchain:
1. Fewer Intermediaries
Blockchain networks can confirm a transaction’s integrity, which allows the process to become smoother since it does not require further intermediaries. Buyers and sellers can make a direct transfer of funds via a peer-to-peer payment system laid out with the blockchain as the infrastructural layer. Deploying blockchain in payments processing would save the transaction data on a secure server or, should we say, multiple servers ( or nodes) in the blockchain network. While traditional transfer methods with intermediaries could be meddled with, blockchain technology allows the data to be accurate and authentic.
2. Greater Safety
You must have heard that blockchain technology offers greater safety regarding payment systems. Here is why:
The quicker transfer through blockchain provides lesser time for hackers to intervene with payments
Every entry in the blockchain’s journal after verification becomes an irrefutable part of the history of the ledger, and the data is almost impossible for a hacker to meddle with
Blockchain networks use two security keys: an open (public) key available to each user and a private key used exclusively by the parties involved in the transaction. The private key is required to initialize transactions and can only be used once, so even if a hacker steals it, they cannot make any further transactions.
3. High Speed
While the slower Bitcoin blockchain performs transactions across borders in a matter of a few minutes, a faster Lightning Network transaction can be completed in a few thousandths of a second. Blockchain’s faster payment processing completely puts traditional transfer systems out of the race, which take up to 5 days completion time for international transactions.
4. Low Cost
Since blockchain-based payment systems require fewer intermediaries, commission costs get deducted from the transaction fees. Generally, the transition to the blockchain reduces transaction costs to 0.001-0.1 of their original size. Using cryptocurrencies for money transfers can make the price of a transaction even lower. While the conversion costs of cryptocurrencies to fiat currency would be added, the size of these costs is bound to decrease as the market for crypto grows larger.
5. Anonymity
Blockchain networks are, for the most part, open-source software that leaves no room for “back doors” or personal or business data recording and transmission functions. Moreover, no third parties verify or manage the transactions, allowing the blockchain ecosystem to be completely anonymous. This makes up the list of blockchain advantages as a payment processor.
