Ways Cryptocurrency Is Changing Finance Forever
Cryptocurrencies and the blockchain technology they are based on will forever change the way the world conducts business. Some major banks have adopted internal cryptocurrencies utilizing blockchain ledgers to track international transactions. The benefits of a centralized digital ledger that can't be altered mean more secure transactions overall. Let's take a look at some of the benefits of cryptocurrency.
Traditional business deals require both parties to keep their own individual records about transactions. Since these records require labor and time to update, many times business records are not perfect. Blockchain technology solves this problem by adding each transaction to the blockchain ledger the instant it is confirmed. These transactions can be cross-referenced and will never change, making greater accountability between business partners possible.
Despite the public nature of the blockchain ledger, the individual transactions are still anonymized. Cryptocurrency is anonymized so that each transaction stands alone and individual users cannot be picked out on the chain. This differs from traditional banking methods like credit cards, where banks can see your entire financial history. Cryptocurrency transactions are anonymized except for the two parties who are conducting business with one another. Everyone can see how much cryptocurrency changed hands, but not the identity of the parties involved in the transaction.
The price of exchanging and converting fiat currency is one of the most exciting ways cryptocurrency is changing the financial industry. The cryptocurrency Ripple (XRP) made headlines last year when PNC announced it would use Ripple technology to process international payments. Traditional international payments between currencies often involve exchanging one currency to U.S. Dollars. Those U.S. dollars are then used to buy the desired exchange currency. This process involves a lot of fees and take more time to process.
XRP takes only seconds to process compared to traditional processing methods. The idea is to replace the U.S. dollar transaction with XRP. The distributed ledger system used by XRP means funds can be released in a matter of seconds, rather than days.
Easier International Trade
One of the by-products of banks and financial institutions adopting cryptocurrencies like XRP means more straightforward financial trade. No longer do international transactions take days to complete. Exchange rates, interest rates, and transaction charges will all be reduced thanks to cryptocurrencies. Cross-border money transfer is one of the best use cases for cryptocurrency. These transactions are not subject to currency exchange fluctuations, which can tack on lots of additional fees.