Ripple (XRP) – Blockchain technology seems to be gaining ground in the fintech industry as it continues to display potency in the sector. But due to its profoundness, there has been rousing claim that the technology is already threatening the existing payment system, and whether it will be able to take over soon.
Similar to this, at the Money 20/20 event in USA, Ripple CTO David Schwartz, and his opponent, Esther Pigg, the SVP of Product Strategy at FIS Payments was asked the question: “Will Blockchain Replace Today’s Payments System”.
Responding to the question of the moderator Tony Hayes, Schwartz who stood in defense of blockchain augured in two-pronged. While describing the archaisms of the existing global payments systems, he noted that they were developed before the invention of Internet, in the “postal and batch era”
Based on this, he posited that the existing systems cannot match today’s market demand where the world is being driven by internet and sophisticated technology.
He explained that before now, there has been efforts to proffer solution to the problem, but they seem temporal.
“We’ve been trying to put band-aids on the problem for years now. Apple Pay, SWIFT GPI, bank’s web and mobile interfaces — these are all just short-term fixes,” Schwartz stated.
The CTO added that these band-aids cannot meet the demand of new companies and consumers like Uber and Amazon, and they are beginning to face “nightmare” in executing payments to customers and partners.
Schwartz said in such instance, obstructing technological advancement in solving problems like these, which is exactly what blockchain is doing for cross-border payments, will be hard.
Before concluding, Schwartz pointed out 3 reasons why blockchain is the ideal solution to the problems faced by the existing mode of payments.
- In terms of security, blockchain is a self-defending system as it allows every participant to impose rules.
- Compared to YouTube, blockchain can never witness outage, so they are very reliable.
- The possibility of enforcing rules makes blockchain governance an interesting one as it grant every participant authority.
“Look at what email did to postal mail. Look at what digital music did to CDs. And, if you look at the developing world, they skipped landlines completely. The same can be said for the developing world moving straight to mobile wallets,” Schwartz concluded with expaination on what the transition would look like.