Blockchain can be a universal solution to the problem of payments


  • Digital currencies could end the dollar’s dominance

  • DeFi will be hostage to Ethereum and its high fees

  • Experts are currently working on an alternative Ethereum

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The development of computer technology is changing the world, creating a new reality. The same goes for money. And if a thousand years ago the main means of payment were gold and silver, today we use paper banknotes or electronic payments. Tomorrow, fiat money may be replaced by crypto or digital currencies, created on the basis of the blockchain or without it. What awaits the world of finance in the future and whether blockchain can become a universal solution to the problem of domestic and cross-border payments, BeInCrypto found out the ambassador of the UMI cryptocurrency Andrei Amris.

– Andrey, do you think blockchain can change the future of fiat money? What will happen then with the US dollar, which for decades was considered a “hard” currency?

A.A .: I’ll start a little with the history of money. It doesn’t matter if we’re talking about the dollar, the Russian ruble, or the Ukrainian hryvnia, money has three main functions: saving, payment, and a measure of value. Each currency handles these three functions differently. The more unstable the economic situation in the country of circulation of a certain currency, the more uncertain the investment climate there, the higher the likelihood that this currency will suffer from high inflation or volatility. An example of a situation where the weakness of the national currency has already assumed truly Kafkaesque features is Venezuela. The purchasing power of a bolivar decreases by several percent during the short time it takes a person to reach a store..

Who needs a currency that yesterday allowed one to buy one set of goods, but today has depreciated and allows you to buy much less? Stability is a very important quality for money. Therefore, the world will not soon be able to get away from the dominance of the American dollar as a universal currency – a powerful restructuring of the majority consciousness is needed in order to understand that an unsecured currency, which represents a power with the largest national debt in the world, is held in first place due to the induced confusion and fear, but not at the expense of intrinsic value.

– That is, you think that the dollar, as a stable currency, has outlived its usefulness? Why is the global economy so tied to the US dollar??

A.A .: The disadvantages of the modern monetary system are due to the history of its development. At its core, the global monetary system has remained unchanged over the past five hundred years. Of course, a lot has changed during this time – fast and convenient exchange instruments have appeared, the derivatives market has developed, modern payment systems, customer-oriented digital banks have come to the world, some operations have completely gone online.

But the foundation is still the same: it is a system of banks and a monetary unit, one way or another tied to a particular state, its borders and legislation. All digital innovations in this system are like crutches that help it not collapse. Although it is technically now possible to conduct instant transactions from one part of the world to another, in practice, subagents have to wait several days for money from partners, especially if they are located abroad..

And here the possibilities of digital money are much wider than that of centralized payment systems, which imply a whole series of different intermediaries – banks, correspondent banks, clearing centers. Given the rapid development of cross-border business and the move away from the local business model, interest in digital currencies will grow. So far, it is held back mainly by fear associated with the uncertainty of regulation and taxation of such instruments not only in Russia, but also in other countries..

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– Can digital currencies be the solution to this problem??

A.A .: Despite the fact that the online payments market is growing exponentially, this area is full of problems like no other, and these problems are difficult to solve not only within the traditional financial system, but also within the new industry – blockchain payments. It is the solution of the problems of cross-border transfers that has been one of the main tasks of cryptocurrencies and DeFi applications, which have attracted such wide public attention over the past couple of years. The problem of centralized finance is the high cost of cross-border transfers, which take up to several days and are the subject of close attention of regulators. All of these factors are links in one closed chain, where each cause is a consequence of the other. To break this vicious circle, a technology based on the principle of equality and fairness, devoid of a center and no need for intermediaries was called upon – blockchain technology.

– What advantages of digital money over fiat money would you highlight?

A.A .: The adepts of decentralized technologies are constantly talking about the benefits of blockchain. This is a higher speed in the case of international shipments, low commissions that do not depend on the size of the transferred amount, and complete transparency. If there are no complaints about the last point, because the transparency and verifiability of each byte of information on the blockchain is its fundamental property, then about the speed and, especially, profitable commissions, it should be said separately.

– But you do not agree with this statement?

6 Ways Blockchain Can Be Used in Financial Services

Blockchain can be a universal solution to the problem of payments

A.A .: Not really. When diving into the topic of the advantages and disadvantages of blockchain networks, the fact that the blockchain infrastructure has not only caught up with the speed of the traditional one, in particular the payment giants Visa and Mastercard, but is also technically far behind, and for that it will take a lot of effort and time to resolve this important issue. Yes, in some cases, when it comes to sending a large amount abroad, blockchain solutions are convenient: through official channels, in particular, banks, a large transfer with a high degree of probability will take up to several days, since several correspondent banks … On the blockchain, the transfer will take from a minute to half an hour, depending on the chosen network. And the commission will be paid alone – network, and not as a percentage of the transfer amount.

– Then it turns out that blockchain and DeFi Decentralized finance (DeFi) is financial services built on the basis of blockchain technology that offer users access to an open, efficient and … More ideal for business, not retail users who do not send huge amounts several times a month? Business can save on paying commissions, and transfer times are significantly reduced.

A.A .: This would be the case if the lion’s share of DeFi projects were not developed on the Ethereum platform, which remains very overloaded. We are talking about commissions – the very ones that, by habit, are still considered low, but in fact they have not been such for a long time. A simple example: on October 13, two transactions were made on the Ethereum blockchain. The amount in ether at the beginning of the exchange was equivalent to 4,500 rubles. After two transactions (the first is token verification, the second is a swap for ethers), 1,500 rubles remain in ether in the wallet. The commission for two transactions took 3,000 rubles. Comments are superfluous – no bank will take such commissions from such a small amount.

And this pain is very sensitive for the DeFi industry, which is all about Ethereum transactions. Each exchange for ether takes place within the framework of the blockchain, where, due to its popularity, the price for gas has already exceeded all permissible norms. Such high fees make Ethereum unsuitable for household payments and micropayments. And for some reason they talk about it very little so far, but the time is approaching when they will talk about it everywhere. And this is not only the problem of Ethereum – for the same seemingly super convenient transactions in Tether (USDT) now you have to pay $ 4. It would seem that not a very large amount, but quite tangible, especially when you have to make several transfers a day, which is very common in business settlements – one of the main areas of USDT application.

Returning to Ethereum, I would like to say that it is already obvious that the network is less and less suitable for hosting DeFi applications on it. The network, which ate two-thirds of the amount of 4.5k rubles in commissions and would have eaten up its remains when transferred to an exchange office, to put it mildly, is no longer suitable for ordinary everyday transfers between people. The DeFi industry urgently needs to look for alternative platforms, because willy-nilly, all project tokens are linked to the main currency of the network in which they are located. Networks in which the situation with commissions is absolutely abnormal.

– Is there an alternative to Ethereum?

A.A .: Today, new platforms and blockchains are being created for decentralized finance. Already today, blockchains such as BitShares, EOS, Tron, Serum and others are working. We have also created our own UMI blockchain. Despite the fact that the project is only 4 months old, the network already has over 40,000 active users. We believe that our main advantage is the absence of commission for transfers. We also have a staking program for validators..

– That is, new platforms supplant Ethereum?

A.A .: Nobody can answer this question now. Be that as it may, the future of money is largely being decided now. Today we see how the landscape is changing and even clumsy giants – banks – are trying to implement blockchain in their processes, realizing that without this technology they will hopelessly lag behind reality in a few years. The future belongs to transparent and convenient systems that will be suitable for daily settlements, both large and small, within the framework of business and personal relationships. I would like to believe that the blockchain industry will solve its problems, especially since there is clearly a movement in this direction.

You can find all the relevant information about the UMI project in the blog

Using Blockchain for Payments


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Blockchain can be a universal solution to the problem of payments
Blockchain can be a universal solution to the problem of payments
Blockchain can be a universal solution to the problem of payments

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