Read the Original Article on LinkedIn:
The flow of money is crucial for our global economy. On a macro scale, it facilitates trade and drives economic growth, with net exports playing a significant role in a country's GDP. On a micro level, it enables labor mobility and supports remittance, allowing individuals to send money back home.
Despite its importance, the existing global payment infrastructure faces several challenges. These include a complex chain of intermediaries leading to associated costs, currency conversion issues (especially when employees prefer local currency payments), and slow transaction speeds with security threats due to factors like time zone differences, document verifications and multiple intermediaries involved.
Blockchain infrastructure, coupled with Stablecoins, offers a promising alternative to address these challenges. Sending money directly between blockchain accounts is instant, leveraging shared ledgers with global interoperability that handle state synchronization between different blockchains. This represents a shift towards a public good model, in contrast to the private provision prevalent in previous infrastructures. Stablecoins, being programmable, can interact with blockchain-based applications (Dapps) for flexible customization based on specific use cases. Different designs of Stablecoins cater to various needs, such as CBDCs for macro/sovereign transactions, centralized Stablecoins for financial institutions, and decentralized Stablecoins for DeFi, particularly effective in nations facing political turmoil, sanction, or poor financial infrastructure.
Ultimately, the goal is to enable global unified liquidity by breaking down silos. The shared ledger and interoperability infrastructure contribute to a cohesive and interconnected financial system, reducing barriers and allowing for more fluid movement of liquidity on a global scale. This approach seeks to create a financial environment where money, assets and funds can flow seamlessly across borders, promoting efficiency and unity in the broader financial landscape.
Major players like Visa, Mastercard, PayPal, and Venmo are actively engaging in the development of blockchain based payment solutions, recognizing the vast opportunities in this evolving landscape. A map by a16z contextualizes the expansive size of the global market, indicating the substantial developments underway in this field -https://buff.ly/3LAbJCZ