Change is in the air, as evidenced by The Bank of London’s recent introduction as a self-described disruptor of the foundations of banking, particularly with regard to end-to-end international banking services.

It could be time for an invention that revolutionizes the sector and offers far easier, faster, and less expensive solutions. Some contend that the foundation of these solutions may be cryptocurrency, or rather the underlying blockchain.

Let’s examine some of the important elements that have recently been discussed in the media: value volatility, transaction rate, transaction time, transaction cost, energy consumption, and blockchain size. 

1. Uncertainty Of Worth

Price instability is the primary obstacle that cryptos confront in comparison to fiat money. Although most of us haven’t experienced the mayhem brought on by devaluation, crypto payments confront comparable difficulties. Companies often aim to profit from the merchandise they offer. They typically charge in the exact currency as their charges to mitigate losses. They pay a price to protect themselves against unfavorable foreign exchange movements if they are pricing (or purchasing) in a different currency. If cryptocurrency payments were accepted, every transaction would involve a crypto-to-fiat swap and need hedging. The adoption of hedging products is not a realistic option due to the excessive volatility.

2. Frequency Of Transaction

Bitcoin, being a brand-new virtual currency, executes at a far slower rate than Visa’s 32,000 transactions per second (“tps”) upon that card payment processing system. The factors limiting its activity pace include the procedure by which a block is included in the blockchain, the number of payments it can handle at once (block size, 1 MB), as well as the intended duration to add a block (10 minutes). The limitations of Bitcoin are being addressed by creative approaches that are developing as blockchain technology develops.

3. Transactional Period

There seem to be two important processing time measurements for bitcoin transactions: the processing time as well as the time needed to be comfortable that the operation won’t be reversed. Regarding Bitcoin, this translates to a median processing time of ten minutes and one hour for verification. The desired median is 10 minutes, but if the charge is insufficient or the traffic is large, it might take more time or just never occur. Third-generation distributed ledgers are already being developed, some of which promise near-instantaneous transactions everywhere in the globe.

Even the quickest of payments may take up to two hours, and that’s a window that’s open around the clock, every day of the week.

4. Transactional Price

With varying percentages, set components, and a discretionary element to boost the likelihood of high performance, the costs associated differ dramatically. A few of the most recent cryptocurrencies don’t charge processing fees at all, whereas older coins charge more. The exchange you choose for your bitcoin transactions will also affect the transaction cost. For instance, you could pay almost no fee on platforms like Bitcoin Era, thus you can go to the Bitcoin Era login page. There is generally no explanation why more recent cryptocurrencies can’t be able to compete effectively with fiat transaction methods in respect of charges, considering the variety.

5. Use Of Energy

Currently, the daily energy consumption of Bitcoin mining is 300 GWh. That represents one-third of the whole power use in the UK in words we can understand. Bitcoin would use 30 times more power than the entire world if it handled as many transactions as Visa does. So, in a society that is becoming increasingly aware of the consequences of climate change, there are certainly major problems that Bitcoin as a volume payment mechanism has to address. However, a common theme keeps coming up: Third-generation cryptocurrencies can execute transactions without using a significant amount of energy because they use various methods of introducing blocks to the blockchain that do not need parallel computing.

6. Blockchain Dimensions

Blockchains are shared across nodes in the initial generation of network infrastructures, such that every node has a complete copy. If we use Bitcoin as an illustration once more, the blockchain is currently roughly 360 GB in size. Every 10 minutes, a new block is formed, adding 1 MB to the total. That is 144 MB daily and 53 GB annually. This information has to be shared across nodes and stored throughout the dispersed network. It is not feasible to scale this up to handle the number of transactions required to make it a viable rival to the current fiat payment systems.

Conclusions

Conclusions about the destiny of payment solutions and the part virtual currencies may perform in their evolution cannot be made with any degree of confidence. However, we think that payments are poised to undergo a fundamental upheaval we haven’t seen before. Young comers may replace a large number of established big guys. Some incumbents could be adaptable enough to change and live. Payments may consequently appear noticeably altered.