What are blockchain payments, and how can businesses use them?

Blockchain payments are part of a financial revolution that is changing how technology is used in many different parts of our lives. The blockchain is used to process crypto transactions that are recorded on encrypted distributed ledgers. It ensures that the transactions can be sent directly and safely from one person or business to another without using an intermediary such as a bank or financial institution.  

The Bitcoin blockchain is the most famous example of this, as this was the original cryptocurrency, and it has captured the imagination of millions of people across the planet since its launch in 2009. However, there are now many other blockchains and digital assets that can be used in this way. They all have some differences, but also a lot in common. 

Business leaders in many industries are looking to leverage blockchain innovations to improve the way they work. Payment processing is one of the areas where blockchain technology can be used to make a positive difference by replacing existing processes and business transactions with something slicker and more modern.

We’ll be looking at how blockchain payment systems can help make instant cross-border payments with a high degree of security and efficiency. As a way to transfer money without delay or hassle, it offers a neat solution that uses digital assets to replace fiat currency. 

This means that you avoid the need to transfer currency from one currency to another, as both parties can handle the payment using the same token.   

Understanding blockchain payments

Blockchain payments are based on solid principles such as decentralization and transparency. The transaction data is added to the blockchain ledger, which is a public record where the details of all transactions are stored. 

It’s an immutable digital record on distributed ledger technology, meaning no one can change it. The payment transactions with digital assets shown here are always accurate and up to date. It works by storing blockchain data across many computers, known as network nodes, that make up a highly secure and decentralized network.  

Payments made using blockchain transactions are different from conventional payments since they use cryptocurrencies and are sent directly from one wallet to another. No bank is involved, so the payment data doesn’t need to be seen, processed, or approved by anyone else. It’s a peer-to-peer system that you use by accessing directly from your crypto wallet at any time of day. 

This approach has proved to be particularly useful for international payments, as it reduces the time and work needed to send cross-border transfers.  

How blockchain payments work

Every blockchain transaction request and payment involves several stages that ensure it reaches the right recipient speedily and securely. All of these steps are carried out from a cryptocurrency wallet using an asset like Bitcoin, Tether, Ethereum, or another token that replaces fiat currency. The Stellar network and XRP from Ripple are other tokens commonly used to make an instant payment to another wallet. 

Once the sender starts the transaction, it enters the network for verification. It is where the additional safety features become clear. 

The sender initiates the transfer 

The person sending the money must enter their digital wallet and initiate the transfer. It involves typing in the recipient’s address and the amount to be sent. Some transactions may attract high fees when the network is busy, so it’s important to check the transaction fee at this stage.

The network nodes verify the transaction

The next step sees the nodes operating as network participants verifying the transaction. It is where the computers on the distributed network make sure that the digital wallet sending the digital assets has enough funds for the transaction. Everything is done automatically and almost instantly, using the network’s computational power to provide an incredibly speedy payment process.

Block creation and linking

At this point, the validated transaction is added to a new validated block that gets added to the previous block’s hash. In this way, the blockchain payment is completed and is now considered irreversible. The recipient can usually expect to receive the payment instantly. 

Benefits of blockchain payments for businesses

Some major benefits have driven the move towards using the blockchain for payment processing. The following are reasons blockchain technology has quickly become an alternative to traditional payment methods.

Heightened security features. The fact that the blockchain is a secure, decentralized network has helped make it an incredibly safe way to transfer money.   

Instant payments and faster settlement times are achieved using digital currency. It avoids the potentially time-consuming nature of some other money transfer methods.

Blockchain transactions can be carried out at any time. It means there’s no worry about business opening hours or different time zones. 

Distributed ledger technology doesn’t have any problems crossing borders. It can help fuel international business growth, as a crypto payment can be made just as easily to anyone anywhere in the world without using correspondent banks.    

Reduced transaction costs are another significant advantage, particularly with cross-border payments and large amounts. This type of payment, using a digital currency such as Bitcoin and other tokens, is extremely efficient. However, the fees vary, so you should always check before confirming the payment. 

All these benefits give a competitive advantage to companies that use blockchain payment systems to work more efficiently.

Practical applications of blockchain payments in business

Finding practical applications for blockchain projects is one of the most exciting ways of seeing how cryptocurrencies can help boost your company’s operational efficiency. They can be used for a lot more than just making a payment.

Smart contracts

Smart contracts are used to automate agreements. It makes it easier for everyone to see when the contract has been executed as agreed.  

Asset tokenization

Tokenization of assets allows us to extend the reach of real-world assets like property and art. Blockchain solutions allow for fractional ownership and a clear, transparent ownership trail. 

Identity verification

Identity verification is one of the growing trends that many blockchain networks have been working towards. Users can verify their identity and then use tokens to confirm this at any time.

Supply chain management 

Supply chain management is another area where existing systems are unable to provide the same benefits as a distributed database. The transparent and immutable nature of the blockchain is ideal for this type of transaction.

Peer-to-peer

Direct contact with clients or followers is another of the many benefits we can find. The blockchain has already been widely used to allow sports and music fans to feel a closer connection to their favorites through the use of fan tokens.

What industries are particularly suited to blockchain payment adoption

It is another area that should be of interest to all forward-looking businesses. However, there are certain industries where the adoption of the blockchain network is more urgent. E-commerce is a good example since being able to accept payments to a crypto wallet is a huge advantage.  Fintech companies also need to be aware of this technology and how it fits their business model.

Businesses that have international partners or customers should also consider this approach. With traditional banking, international transfers and other transactions can take time. When a new block is added to the blockchain, it doesn’t matter where the receiving crypto wallet is located. So, it can support real-time domestic transfers and international payment orders in the same way.

Genome: your financial solution for business operations

Although utilizing blockchain technology for your company’s growth is a viable strategy for some, there is one thing that all businesses need: a reliable financial provider. If you’re looking for one, Genome can be just what you need.

Our services, such as international money transfers, SEPA Instant Transfers, and currency exchange, are designed to fit your evolving business needs.

With virtual debit cards and batch payments, we offer products that solve some of the most common banking problems for companies.

Moreover, Genome is crypto-friendly: clients can easily send payments from our wallets to crypto exchange platforms and vice versa! Gain full advantage of using our multi-currency accounts – store funds in EUR, USD, GBP, and 8 more currencies.

The future of the blockchain 

Blockchain’s potential is something that all modern businesses should be aware of. It allows instant transactions with an incredibly secure approach. Using the computational power of a computer network can ensure that transfers are processed quickly with no fuss.

Combining the power of private blockchains with traditional payment methods and banking services can be the perfect approach for the future. Adoption brings various strategic benefits, so it’s not just about saving time and getting a better exchange rate. It can also help with fraud prevention and transparency and give the company a modern look.

Any company that misses the chance to involve Bitcoin and other tokens in their business model is losing a chance to gain a competitive advantage from the latest technology. While issuing smart contracts and the use of a private key might have seemed cutting-edge not long ago, they are now essential everyday elements of any good business.

Explore blockchain payment solutions

It is the perfect moment to explore the right blockchain payment solutions for your business.

Don’t wait any longer before getting your first private key and using the blockchain to make your first crypto payment. You can expect to discover a range of interesting benefits that give your business a head start in the race to make the most of the latest technology.   

Additionally, can learn more about other advanced financial solutions offered by the industry. You can start by exploring Genome. We offer you easy access to dedicated IBANs, multi-currency accounts, and other traditional services you need. Whether you want to make a payment to the other side of the planet or use a debit card to cover business expenses, we’ve got everything you’re looking for.