Before you find out what blockchain payments are like, surely the first thing you want to know is: how much does a blockchain cost? Well, we can tell you that the use of this technology represents very low costs for users; in fact, it could replace cross-border payment systems and their high commissions.
That said, if you want to know more about blockchain technology, why it represents an alternative to cross-border payment systems, the benefits of its use and other matters related to its operation, we invite you to continue reading.
What are the advantages of blockchain in payments?
To begin to understand how blockchain helps with payments, we need to explain what this technology is all about.
Blockchain technology is a new way of storing information in which data is recorded in the form of blocks that are cryptographically linked and organized in chronological order, providing both privacy and security at the same time.
In addition, it is important to mention that this technology does not require a central server or database, but makes use of the infrastructure of nodes (several servers) or a network of connected users. In other words, operations are decentralized.
So what are blockchain payments? To help you understand this, we offer you an example that will also illustrate the advantages of this technology:
When a person needs to make a payment (domestic or cross-border), he/she does so through banks, which act as intermediaries between the buyer and the seller, i.e., they are the ones that authorize the money transactions from an issuing account to a receiving account and thus validate the payment for a good or service.
Blockchain payments are those that people no longer need banks to make by using technology, and are therefore exempt from the fees charged by them.
These payments are also secure, as blockchain technology allows the tracking of movements from beginning to end, while protecting the privacy of users, as only network participants are notified of the transactions made, but the identity of those making the transactions is not revealed.
How do blockchain payment systems work?
To answer this question, we will make sure you know how a blockchain transaction works.
Pros of blockchain payments
The benefits of these payments are related to blockchain features:
- Blockchain is protected against cyber attacks: The fact that it is intrinsically a network of several interconnection points, makes it difficult to be attacked in its entirety and, therefore, the security of the information that supports your payments is not compromised.
- The blockchain system is resistant to technical failures: If for some reason a node is disconnected from the network, this does not affect the overall system performance and the stored data is still available, ensuring that your payments are made in a timely manner.
- No one completely owns blockchain: Each node in the network has the capacity to make copies of the database, which means that you do not depend exclusively on a single information hosting provider for this payment system and the costs for its use are affordable.
- Each user can act as their own bank: Your funds or money are protected by a secret password that only you know, so no one else can make payments impersonating your identity.
Payments can be tracked in a timely manner: This gives us an idea of how blockchain can solve the payment conundrum, as it guarantees end-to-end traceability of transactions made on the network.
Cons of blockchain payment
Despite their benefits, these types of payments are not entirely perfect and have the following drawbacks:
- Private keys to the funds to make payments: As incredible as this may seem, it can also become a disadvantage, because if you lose or forget your password, it is difficult to recover it and, with it, access to your money.
- Anonymity of payments: the fact that only network participants are notified of the transactions made, and that the identity of those making the transactions is not revealed, is a blind spot that can be used for illicit acts.
- Payment errors are not allowed: if the payment information is incorrect, it can no longer be easily changed.
Now that you know all about blockchain payments, if you were not convinced to use them by learning how much a blockchain costs, you will be because of all the benefits they present. At PayRetailers we can help you with this option as payment method.
Now that you know all about blockchain payments, if you weren not convinced to use them because how much a blockchain costs, you will change your mind because of all the benefits they present. At PayRetailers we can help you with this option as payment method.