The impact of a blockchain-based economy will be felt across many business sectors and industries. But one industry, in particular, stands to be disrupted the most: banking, whose long-established role as facilitator, guarantor and validator of payment operations would lose much of its relevance.
Blockchain’s features match the requirements for a payment infrastructure: security, processing speed, traceability and global registry (ledger)
The distributed ledger makes it possible to connect all the parties in a financial trade in real time for faster processing of a payment – all while maintaining an audit trail.
Because processing is distributed over the network, it is almost impossible to alter or manipulate the data, hence preventing fraud or a security breach. This file-based transmission could potentially be replaced by Application Programming Interface (API) technology to enable the creation of blocks of transactions.
If this usage becomes a reality, payments processing would be in real time, and companies would no longer need to depend on bank statements to reconcile their accounting ledgers.
Although blockchain technology is promising, there are several challenges in using it for payments on a large scale. Here are a few of those issues:
Scalability: For example, the global payment network SWIFT processes as many as 30 million messages in a day. This processing volume requires a significant amount of computing power and infrastructure, whereas the current volume of Bitcoin transactions is relatively low (a few hundred thousand per day), and the technology has not been tested for high volumes of data.
Open network: Unlike current payment networks, blockchain is an open network (public blockchain), and hence would pose challenges for deployment of payment infrastructure. There is a possibility of using private blockchain networks, but the feasibility of such networks needs to be evaluated for the global scale.
Legal: Whereas blockchain technology has rapidly evolved, the underlying legal framework is still developing and uncertain, and lacks harmonisation across national jurisdictions - Daniel spyralatos
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