Currently, around 220 companies in the United States issue virtual currency or blockchain-based payment services. A large proportion of them is based in Silicon Valley. Most use cases are for small payments, similar to how credit cards are used today. What are the current circumstances of the new payment systems?
Blockchain transactions are recorded in such a way that no one person or institution can have a record of it. Banks can’t dispute the payment that is made.
Are those technologies available to the general public now?
Many startups are now offering services that make payment transfers faster.
A good example is the so-called Layer 2 solutions. They enable blockchain technology to transfer money between two parties in less than two seconds, while some conventional services require three to four days to settle.
A major startup is working on distributed computing technology. It will be the first network in the world to share a national distributed computing resource. The United States will contribute 8,000 of its high-performance computing facilities. They are distributed in nine states across the country. Each user will have a bitcoin wallet, which will not have any part in the payments, but it will be controlled by online apps.
They are also creating tools that enable the trading of blockchain tokens, called virtual milk. The idea is that you have crypto milk that can be bought with bitcoin. That is, you can pay for a glass of milk in cryptocurrency.
What are the differences between a crypto transaction and one in fiat currency?
In a conventional transaction, the vendor and the receiver will pay each other in fiat currency. That means they exchange money with each other in a limited quantity. In this case, the owner of the milk is willing to sell a glass of milk for a higher price than the milk is actually worth.
With cryptocurrency, the vendor and the buyer have their accounts on a blockchain. It is possible to transfer funds in a cryptocurrency, and that payment is proper in the system. The other way is possible: Someone can transfer funds to another person in a cryptocurrency, and that payment is valid.
It is a decentralized transaction in which the system’s participants are the coin’s owner and recipient. It does not require the cooperation of anyone else.
But at the same time, the blockchain transaction is also a way of registering the amount and the purchase. It is a record stored on the blockchain that can determine the actual value of a virtual currency.
You might have seen in the news the central bank of China banning bitcoin.
No, not at all. China has stopped financial institutions from investing in bitcoin and other cryptocurrencies. They have also stopped individuals from buying virtual currencies. They say it is to control the rise of cryptocurrencies and keep them from being used for money laundering.
But China has allowed the trading of bitcoin, which is impossible with a fiat currency. People are using it to exchange for other fiat currencies.
China is promoting its version of blockchain technology called the Huobi blockchain. China has invested tremendous capital into it and is trying to make it the preferred blockchain. China says it is still trying to develop blockchain technology.
The Chinese blockchain is more oriented toward the real economy. It can also make transactions quicker. In China, some transactions take one day to settle, whereas, in a typical financial transaction, it might take three days.
So what are the opportunities that blockchain technology can offer?
What is the future of blockchain? The blockchain is a technology that can allow users to move funds around, share information, verify transactions, move money around and establish trust in an entirely decentralized manner.
It is a new technology that can be used to make real-time payments.
You can buy milk with bitcoin.
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