Binance Research, the market research and analysis arm of Binance, released a new report: “Blockchain Payments: A New Beginning.” As such, their reviews are always helpful to learn more details about the world of cryptocurrencies with updated and real data.
Payments is a fast-growing, global industry that remains tethered to 50 year old infrastructure.
This report dives into the problems with modern payments, and how blockchain technology can address them.
Read on 🔽https://t.co/gReIrrk4Iu
— Binance Research (@BinanceResearch) August 31, 2024
The report highlights that blockchains, distributed ledger technology (DLT) and applications built on them have the potential to significantly boost efficiency in the payments industry and challenge existing players in the space.
In fact, the traditional payment system is estimated to generate $2.83 billion in revenue in 2024 and is expected to reach $4.7 billion in 2029 at a compound annual growth rate of 10.8%.
Binance Research: No middlemen, no borders: The financial freedom offered by cryptocurrencies
Indeed, despite the amount of revenue generated in the industry, Binance researchers said it is plagued by numerous intermediaries who charge a lot for each transaction that goes through them. In itself:
- Traditional payments involve up to six intermediaries.
- According to World Bank data, the global average cost of sending $200 via traditional methods is 6.35% or $12.70. This is 50,800 times more expensive than using Blockchain to send any amount of Stablecoins.
- On an alt-L1 like Solana the cost for $200 would be around $0.00025.
- As major banks explore the use of Blockchain for their institutional transactions, platforms like Binance Pay offer faster and cheaper cross-border transfers for millions of users.
Average cost of sending $200 cross-border. Source: Binance Research
In addition to the high cost and the presence of numerous intermediaries, these transactions take a long time to complete. Cross-border payments typically take up to five business days to clear, leaving senders and recipients in the dark and unable to trace the movement of funds.
The researchers said: “Current payment technology is in dire need of a fresh start, and blockchain technology could make this possible.”
Binance Pay: Leader in cross-border payments
Globally, Binance Pay has seen meteoric growth, with an exponential increase in transaction volume and user base. More and more people are choosing this platform to send money quickly and securely.
- In H1 2024, Binance Pay saw a 43% increase in active users compared to H2 2023, along with a 9% growth in transaction volumes.
- This growth is supported by strong performance in 2023, where transaction volumes saw a remarkable 71% increase year-over-year, totaling over $77 billion.
- Binance Pay’s core markets include South Asia, Eastern Europe, MENA, and Latin America, reflecting the global enthusiasm for crypto payments.
In this regard, Guilherme Nazar, Regional VP for Latin America at Binance, points out: “Latin America is a thriving market for cryptocurrencies. We have three countries in the top 20 Chainalysis markets, with Brazil, Argentina and Mexico.”
He added: “Payment with cryptocurrencies is something that has been attracting more people to this industry in the region, because it allows you to keep your money invested and use it for daily needs at any time, 24/7, with minimal or no fees.”
No more waiting! Blockchain: the solution for instant payments
Specifically, Binance said blockchains could do “wonders” for the merchant and consumer experience. They offer a global, uniform and transparent digital environment where users can execute transactions in seconds with just a smartphone and an internet connection.
Blockchains themselves offer a direct line of communication between merchants and consumers, eliminate the need for multiple intermediaries and correspondent banks, and free fintechs from the traditional payment system.
It is worth noting that some traditional financial payments giants, such as Visa, have begun piloting projects to enable global, institutional-grade payments, but significant growth is needed at the individual and retail level.
Finally, according to Binance Research, given that the payments industry is huge, the adoption of technologies like Blockchain is likely to be slow and cautious. However, researchers believe that this gives the Blockchain industry time to “come out of its adolescence,” create the necessary tools, and solve problems such as scalability and regulatory uncertainty.
I’ll leave you with this quote from Don Tapscott: “Blockchain technology is the cornerstone of a digital revolution that will transform the way we interact, trade and trust in the world.”
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