Blockchain technology can help benefit the global fintech sector financially, as well as give it a much-needed freshness in the years to come. Implementing distributed ledger technology, that is, blockchain, in the existing financial sector could result in savings of around $10 billion (roughly Rs. 82,252 crores) over the next seven years. The findings were published as the result of a survey, which was conducted by Ripple in partnership with the US Faster Payments Council (FPC).
A total of 300 finance-related professionals from approximately 45 countries were surveyed by Ripple and FPC. The participants included financial analysts, company CEOs and fintech directors. 97 percent of the total respondents expressed the belief that blockchain technology It has the potential to improve online payment services, especially for the processing of international transfers.
The report states that at present, people in the financial sector are dissatisfied with legacy rails for cross-border payments.
“Crypto cuts costs. Transaction costs are up to 80 percent less expensive for end users who use stablecoins for cross-border payments.” the report said,
Transactions recorded on the blockchain are saved as pieces of information and distributed among different blocks of the network. This makes the storage of sensitive information more secure against hackers and cybercriminals, as well as keeping the process cost effective compared to the huge cost of maintaining current servers and data centers.
Furthermore, the history of transactions recorded on the blockchain cannot be tampered with, and thereby financial records remain transparent and tamper-proof, with no additional cost added to do so.
This is the reason why governments around the world are quick to act despite being skeptical about accepting cryptocurrencies.
Based on blockchain networks, CBDCs are digital representations of fiat currencies, which are expected to make online payments faster and more secure, as well as reduce reliance on cash notes, which are often misused for illegal activities such as money laundering. are done which are not recorded.
Despite being volatile and unregulated, the blockchain-backed crypto sector has also managed to retain support from the global investor community. The sector was valued at over $3 trillion (roughly Rs. 2,46,91,380 crore) around November 2021, with a current market capitalization of $1.18 trillion (roughly Rs. 97,04,768 crore).
Ripple reports that 52 percent of merchants around the world will start accepting crypto as payment in the next one to three years.
Crypto acceptance will be boosted mostly in the Middle East and Asia-Pacific regions where 64 percent and 50 percent of retailers are expected to start accepting crypto payments. European merchants (58 percent) are also looking to open the door to crypto payments, especially now that the EU has approved MiCA crypto regulation for area.
The report further states that green blockchain is supported by those aware of blockchain systems, who use proof of stake mining model. More than 98 percent of respondents to the Ripple survey said that the lower energy consumption by blockchain networks is essential to their acceptance in the current fintech sector.
“Cryptocurrencies present a potentially compelling mix of flexibility and utility. They are well-positioned to solve some of the toughest issues in payments by efficiently and effectively filling various gaps in payment flows, said Reid Luhtanen, executive director of the US Faster Payments Council, as saying in the report.
The report states that as more countries bring in legislation to regulate the crypto sector, blockchain technology will be well received by more financial institutions.