Transferring money is a vital part of every business entity and individual. Now that the cryptocurrencies and other digital assets are growing. It makes sense to use this technology for digital money transfers. Needless to say, virtual currencies (cryptocurrencies) offer significant advantages for those who transfer money regularly. By using cryptocurrencies like Bitcoin and Ehtereurm, users can transfer money faster and with more security. Sending money using cryptocurrencies is easier, and cheaper than fiat currencies.
However, without proper KYC verification solutions, cryptocurrencies can easily become the hub for money laundering. With more and more users pouring in, the landscape of digital currencies is changing. Millions of investors worldwide also see crypto as a viable investment option. Here’s how cryptocurrencies can change the online money transfer industry worldwide.
In the simplest terms, cryptocurrencies are digital currencies/virtual currencies that use cryptography technology for anonymous transactions. Cryptocurrencies use a decentralization technologies or ledger, known as Blockchain. Cryptocurrencies are currently one of the most secure ways to send and receive money domestically or internationally. By using cryptocurrencies, it is possible for businesses to acquire the most secure method of sending money online while reducing the risks of double spending and fraudulent transactions.
Cryptocurrency’s methods can also help businesses move away from centralized banks. The whole cryptocurrency uses the blockchain technology for secure and seamless transactions. Blockchain technology uses Proof of Stake (PoS) smart contract technology also known as Proof Work (PoS) smart mining technology to authenticate and confirm transactions. To make the process even more secure, whenever a transaction is made, it is posted on a public blockchain address which a global network of users can verify.
As cryptocurrency is decentralized in nature, the crypto industry can easily transform the world of online transactions and send money anywhere throughout the globe. In fact, artists and art sellers now also accept cryptocurrencies as a method of payment.
What is Stablecoin?
The main motive behind Stablecoin is to build a digital currency that users can use for day to day transactions without relying on more volatile digital currencies. Stablecoin is a digital asset, equal to USDC which is a reserve asset or stable asset. Users can exchange Stablecoin for any other currency like Bitcoin, gold, or a fiat currency. Stablecoin can also be modified by an algorithm to remain stable, unlike other volatile cryptocurrencies. Therefore, stablecoin is more suitable for day-to-day transactions because a reserve asset can support it.
Stablecoin is attempting to be a fiat coin as it is backed 1:1 by an asset held in the regulated institution. That’s the sole reason why Stablecoin is an incredibly powerful solution for international money transfers, unlike other members.
While Stablecoin and cryptocurrency aren’t yet perfect for online money transfers, withs some changes they can enhance the money transfers. Plus, users who regularly deal in cryptocurrencies can send each other money in the form of crypto. It’s simple math, the more wallets that accept cryptocurrencies like stablecoin, the more users there will be.
Crypto for Money Transfers
Cryptocurrencies such as Bitcoin and Ethereum are slowly transforming the money transfer industry. There is no need for any intermediary bodies to approve the transaction made between P2P, consumers (B2C), and businesses (B2B). Streamlined use of cryptocurrency for money transfer can offer lower approval fee on loans, faster payment processing and more options for receiving payments.
Blockchain technology significantly reduces the time and cost associated with clearing transactions and settling payments. By leveraging smart contract technology, payments can be initiated and settled almost automatically, thus pushing the users further to real-time transactions which simply isn’t possible by using traditional financial institutions.
With blockchain technology, Cryptocurrency companies has allowed immediate access to funds for money transfers, all thanks to the blockchain technology. To put it in simple words, a person can make donations to a non-profit organization and that organization will receive the money on the same day.
P2P transaction services and digital wallets allow users to accomplish this as well. However, specific rules and regulations decide how long the online money transfer process will take. To make this limitation worse, these services charge a significant fee on each money transaction, one of the biggest examples of this is “PayPal.” Not all of these digital wallets are as secure as cryptocurrency too, by using instant bank account verification software, digital wallets can reduce the risk of payment fraud. To prevent being a part of a money-laundering scheme, these digital wallets also put a limitation on how much a person can transact in a business day.
Using Blockchain for Money Transfers
Money transfers that use banks have certain rules and regulations to follow. Banks allow Automated Clearing House (ACH) payments to go through them and wait for ACH Network to approve these transactions. If there is a small error, the transferred amount will return to the original bank account. Time taken for an ACH transaction to complete varies from 3 business days to as much as a week.
Cryptocurrency on the other hand is extremely secure and fast because the internal network verifies the online payment, private keys, and public keys. Like most digital wallets, the crypto industry uses tokenization to enhance the structure of capital markets. Blockchain can also allow users with bad credit to get loans. Blockchain can also help in reducing the interest rates of consumer and commercial loans.