The number of central and commercial banks using blockchain operations to issue their own digital currencies as well as process payments keeps growing. In 2021, the global blockchain market size was $5.85 billion. By 2030, this figure will grow to $1235.7 billion, so a compound annual growth rate of 82.8% is expected.
Why is blockchain so popular, and what are its advantages over bank transfers? Let's figure this out.
What is Blockchain
Blockchain is a digital database that contains information about all transactions in a chronological sequence. This information is grouped into blocks, and the blocks form chains, linked by special keys. Blockchain transaction information is confirmed by the majority of the network participants. It cannot be edited or deleted without breaking the integrity of the blockchain.
Today, blockchain covers almost all spheres of life. Smart contracts written in its code help monitor:
- logistics and product quality (the French supermarket chain Carrefour tracks over 30 product lines);
- online games that serve as a source of income for players (the blockchain game Axie Infinity);
- digital art rights (music, paintings, gifs, photos, etc.);
- and even the movement of drones (the SkyGrid system).
But blockchain is most in demand in the financial sector. It is actively used by banks (China Construction Bank in China, Credit Suisse in Switzerland, HSBC in the UK, and JPMorgan Chase in the US). It is also required for the creation of digital currency, in particular the Yuan, which China is already experimenting with, as well as for crypto acquiring.
How Blockchain Payments are Processed
A distributed blockchain registry is responsible for processing transactions. This is where all the information received is collected, synchronized and verified. This is handled by a peer-to-peer (p2p) network.
For example, an Internet user wants to pay a certain price for a service or product. The information about this goes into the blockchain. If at least 51% of the computers report that the transaction is legitimate, it will be done.
But if the p2p network detects that the wallet does not have that exact sum on it, the transaction is invalidated. If the transfer is still recognized on one computer, the rest of the network will notice this, and the transaction will also fail. Thus, cryptocurrency payments are not susceptible to fraudulent attacks.
If the transaction is recognized as valid, a new block is created, which includes the hash (solved crypto-task), information about the transaction, as well as the hash of the previous block. New blocks are created every 10 minutes.
Thanks to smart contracts, all processes are automatic and transactions are completed in a few seconds. Blockchain payment processing is customizable depending on your needs and is suitable for almost any type of service.
Differences Between Blockchain Payments and Bank Transfers
Blockchain is decentralized, meaning it does not need a single supervisory authority. In a standard payment for goods or services by bank card or account transfer, the payment system acts as an intermediary between the issuing and the acquiring bank.
It manages the transfer of funds and verifies the transaction, receiving a commission for its services. This is the main difference between cryptocurrency and bank payments.
Blockchain payments are conducted without intermediaries directly by the participants of the transaction. There are no mechanisms that would return the payment (get a chargeback). All this provides it with a range of benefits over the traditional payment system.
Advantages of blockchain:
- Savings on commissions. The more parties involved in a transaction, the higher the fee charged. This is especially true for transactions with foreign companies. Nevertheless, international blockchain payments are cheaper than standard international transfers.
- Transaction speed. Payments are confirmed and processed in minutes, not days. You can make a transaction at any day and hour.
- Transparency. In the registry where blockchain transaction data is stored, you can find information on the transaction.
- Security. It is impossible to hack a decentralized system, and information about the owners of cryptocurrency wallets is strictly confidential.
Read more about the advantages of accepting cryptocurrency payments in the article.
The disadvantages of the system, interfering with full trust in it, are:
- high volatility of cryptocurrency,
- increased regulatory attention,
- difficulties in paying taxes in accordance with the laws of the country.
Despite the disadvantages, user interest in cryptocurrency acquiring services continues to grow. They automate payment acceptance on websites, online stores, apps, Telegram bots and other platforms.
Connecting Blockchain Payments with CryptoCloud
You can connect blockchain payments through CryptoCloud cryptocurrency acquiring within a few minutes. To do this, you need to sign up on the website, then go to your personal account and add a project, and then choose the method of integration. There are three of them:
- universal HTML module;
- structured API;
- ready-made modules for websites developed on the basis of CMS (Drupal, Opencart, Woocommerce, Prestashop, GetCourse, Tilda, etc.).
Detailed step-by-step instructions are offered for each connection option. In case of any questions, you can always contact support.
The connected user gets the opportunity to:
- automate the acceptance of cryptocurrency on the website,
- withdraw funds to your personal wallet within a few minutes,
- work with several projects at once and analyze payments in a personal account.
Before you start working with the service, we advise you to test the integration.
We also advise you to read the «CryptoCloud crypto payment gateway: a full review».
CryptoCloud for Receiving Cryptocurrency Payments
The application of blockchain technology is gradually expanding. Freedom from bureaucracy, the ability to bypass banking restrictions, and the ability to track transaction-related information are attracting both companies and consumers. As a result, the number of cryptocurrency transactions grows, and with them the number of related services.
CryptoCloud is a cryptocurrency payment gateway that simplifies the process of accepting crypto transactions and the subsequent analysis of transactions. If you have questions about the functionality and peculiarities of the service, sign up and explore CryptoCloud personal account. You can also visit the FAQ section, the information there is constantly updated.