Blockchain technology is poised to transform the global payments landscape by addressing inefficiencies in traditional financial systems, according to a report from Binance.
Binance’s research report highlights that while current payment methods, such as Visa and Mastercard, offer the convenience of near-instant payment authorization, actual settlement times are often delayed, sometimes by several days.
This delay is particularly pronounced in cross-border transactions, where communication between banks in different countries can extend settlement times.
In contrast, blockchain-based payments offer near-instant settlement. The report cites a 2021 pilot project by Visa and Crypto.com in Australia, where the use of USDC (USDC) and the Ethereum (ETH) blockchain enabled cross-border transactions to be settled in a fraction of the time traditionally required.
Blockchain payments are cheaper than traditional payment methods
The report highlights some of the financial benefits of blockchain payments. Traditional remittance services charge high fees, especially in regions like sub-Saharan Africa, where the average cost of sending money is 7.73%.
Using blockchain for payments is becoming increasingly popular due to its significantly lower costs compared to traditional methods.
In comparison, blockchain networks like Solana (SOL) allow for transactions at a much lower cost. Sending stablecoins via Solana incurs minimal fees, often amounting to a fraction of a cent.
Popularity of stablecoins
Stablecoins have become essential for blockchain payments, with the market set to settle more than $10.8 trillion in transactions in 2023, according to the report. Excluding automated activities, the figure is $2.3 trillion.
The stablecoin market has seen steady growth, with a combined market capitalization of over $160 billion, led by Tether (USDT) and USDC, which dominate 73% and 21% of the market, respectively.
Challenges of blockchain infrastructure
The report highlights that current blockchain infrastructures have their challenges. Scalability remains a key issue, with even the most advanced blockchains like Solana struggling to match the transaction processing speeds of established payment networks.
Solana, the report reveals, has experienced multiple outages since its launch, raising concerns about the reliability of blockchain technology for large-scale institutional use.
“Since the mainnet launched in 2020, Solana has experienced 7 major outages that halted block production, the last of which occurred in February 2024. Such growth issues should naturally make institutions cautious about relying on blockchains for key business operations, such as payments.”
Binance
Despite these challenges, the report suggests that blockchains offer a promising alternative to traditional financial systems. Their transparency and decentralized nature promote greater trust and security in financial institutions, qualities that are increasingly sought after in a global financial system where centralization and control can be exploited for geopolitical purposes.
The report envisions a future in which blockchain technology will play a central role in global payments, particularly remittances. As the technology matures and regulatory frameworks evolve, businesses and consumers may increasingly opt for blockchain-based transactions over traditional methods.
