Ever since Bitcoin broke onto the scene in the early 2010s, entire new worlds of doing business have opened up. After all, blockchain technology is what makes the work we do here at TraDove possible. For all of blockchain’s invigorating uses in business, one of the most important for global economic development and increased domestic productivity is its versatility in international transactions. Blockchain is a flexible medium that can cut down on exchange costs, total transaction time, and labor hours needed to make a transaction happen.
Disadvantages of current systems
There are a handful of different ways to send money abroad currently. The most dominant system, SWIFT, is defined by Investopedia as an exclusively message-based protocol used to send payment orders to participating institutions abroad. The SWIFT system itself does not actually carry the funds, which are disbursed by the institution receiving the order. This means that SWIFT transactions necessarily entail a great deal of extra work, and therefore, extra time. The actual SWIFT message will take at least 24 hours to clear an institution, and another 24 for the complex exchange of debits between the sending institution and the receiving institution, and for that institution to credit the relevant amount to the account money was sent to. All of this also requires a small army of people scrutinizing transactions for fraud, approving them, and keeping detailed records of each transaction on both ends of the wire.
Time saved during direct transactions
How can blockchain remedy some of these issues? The first and foremost way is inherent in the way blockchain transactions are actually undertaken. A transaction within a blockchain system can be processed instantaneously from one end of a payment to the other, since it is simply a process of moving a credited amount from one wallet to another over the Internet. There’s no need to waste time by going through a banking institution, waiting for them to process and approve the transaction, and then waiting once more for the institution handling the received payment to approve it abroad. Direct connections between the payer and payee cut out the middleman entirely when using blockchain-based exchanges, and money is saved by trading currency at market rate at both ends, avoiding bank and transfer fees done at less-than-optimal exchange rates.
Time saved from blockchain as an inclusive system
Blockchain technology doesn’t just save time, and money, by virtue of its transaction mode. Blockchain also is a self-referential, highly compact means of handling every aspect of a financial transaction. Where standard methods like SWIFT necessitate a separate team of bookkeepers, security officials, and financial institutions to actually disburse the funds involved, a blockchain transaction creates its own records by virtue of the transaction having taken place. These transactions also do not need nearly the same level of watchdogs to ensure they are valid, since signed blockchain transactions are secure by nature.
All of these features make blockchain a rapid form of exchange, since the process is never held up by bloated systems and overloaded, human-error-prone financial centers. Blockchain-based exchanges are, for these reasons, poised to take over in the near future. You’re smart to already be on the bandwagon.