With any newer financial technology, such as blockchain B2B payments solutions, it’s natural to be cautious about safety and reliability, even when the benefits are huge for the user. Take, for instance, the ATM. While the machine came out in the late 60s, it wasn’t until the 80s that their popularity had truly taken hold.
Blockchain B2B payments solutions: a maturing technology
Blockchain payments can be compared similarly: an innovative financial product that is now reaching maturity and gaining consumer trust, with over 10 years of innovation in the space since the release of Bitcoin. With advances in blockchain and associated technologies, it’s now become clear that this fast and cheap international monetary payments enabler will shape the future of finance, paving the way for blockchain B2B payments for safe and near-instant international business transactions.
Myth: Cryptocurrencies are too volatile for business payments
Different types of cryptocurrencies behave in different ways. While you may see Bitcoin (BTC) or Ethereum (ETH) rise and fall rapidly over the course of an hour or a day, there are also cryptocurrencies that behave the same as a fiat currency.
These are called stablecoins, also known as asset-backed or pegged tokens. So, while BTC will perform like a stock option, a USD-pegged token such as Stellar’s USD Coin (USDC) will behave in the same way as the USD at a 1:1 rate. If you take a look at the USD value of BTC across the course of a day, it will be the same as the USDC rate.
Cryptocurrencies like USDC are backed by real currency reserves and are issued by regulated financial institutions.
Myth: You can’t trust financial apps based on blockchain
If you have used apps like Coinbase, Binance, and Kraken for cryptocurrency trading in your personal life, you may be wary of them as they have the potential to become unavailable when markets spike.
During a price surge in Bitcoin in January 2021, Coinbase users reported that they were unable to log into their accounts, make trades, etc. The company reported that it was due to systems crashing from being overloaded with connections. Considering the platform intends to go public in 2021, it’s unlikely they’d fib about the root cause.
As DeFi (decentralized finance) apps are becoming more mainstream, regulations are increasing, and trust is building across a greater cross-section of the community. In fact, “over the fourth quarter of 2020, Coinbase institutional trading volume grew over 110% to $57 billion, while retail trading volume grew by almost 80%.”
How we do international B2B payments
While the simplest form of blockchain payment is a singular cryptocurrency transfer from one business payment address to another, this isn’t the only way that we can now make transfers.
By using an on-chain market exchange, such as the SDEX, or Stellar Decentralized Exchange, we can exchange one stablecoin for another, at the going market rate. Like traditional fiat exchange houses, exchange rates - for USD-backed coins against ZAR-backed coins for example - will vary. However, as these are pegged to real-world values they will closely follow real-world fiat exchange rates.
As the banks often offer poor exchange rates and often long wait times for cross-border payments, this makes blockchain payments an increasingly attractive option.
Towards a faster, cheaper, more secure payments future
DTransfer is helping to shape the future of business payments, leveraging the mature Stellar blockchain to conduct international transactions smoothly, from one fiat currency to another, via the use of stablecoins.
Join our community of partners to experience the benefits of this near-real-time payments platform.