Cashless Society And Blockchain
By Blockbuster Blockchain on Altcoin Academy
The Singaporean government is hoping to go cashless by the year 2025 and is trying to implement digital systems to conduct financial transactions. In the year 2018, a discount was given to all students who used particular applications to pay for their food instead of using cash. There are now more and more applications that people use on a daily basis and is replacing cash usage my a considerable amount. However, cash is still the dominant method of transactions in Singapore. Around 40 percent of all transactions happen by cash and the amount in circulation surpasses that of most countries.
After all, in such a country where efficiency is considered to be one of its key values, using a card or digital payment would make a lot more sense. It takes less time to verify, count and exchange. It also costs money to keep the machines running to print paper bills and it is susceptible to counterfeits and being damaged. In this article, we will explore how the implementation of blockchain technology will be able to take this further and improve the current methods of digital transactions. I will be looking into some of the payment systems, using blockchain, that is being developed or being used to point to their advantages.
Speed
There are many different proxies that one can use to determine the speed of a transaction. For the case of cash, it can go as simple and narrow as the time that is spent picking up the money and counting. In order to make this process a bit easier and faster, people often turn to use bank cards. However, is this really a lot faster? For the case of credit card, it usually takes about 2–3 business days to process the transaction and even for debit cards, the money might be leaving the payers’ bank account right away but it takes time before somebody receives it. In the end, the payment may be more efficient than cash but it is definitely not that much faster if we dissect the process.
So how can blockchain solve this problem? A digital transaction system using the blockchain technology can guarantee almost instantaneous transaction of money. Simply put, it would be taking advantage of both the cash and the card transaction method. While the actual transfer of money is happening right away, it got rid of the necessity to physically hand over the cash.
Verification
There has been a lot of cases where credit cards have been lost and been used by other strangers without the owners even noticing. If it was immediately found and there was insurance covered by the bank, it might not be such a problem that would cause a tremendous amount of property damage. However, imagine a situation where you do not even realize that the card was lost and there was no insurance to cover up for the loss. Then, it is a completely different story. Moreover, even if there are services to cover up for the loss, just the idea of risking property does not sound like a great idea. For the case of cash, although it does not happen in developed countries, especially the ones using paper as its material, counterfeits are still a huge problem in many less developed countries.
The most important aspect of financial transactions is safety. It would be a shame if your hard work is lost because of a flaw in the system. The blockchain technology can solve this problem. Within a blockchain network, when a transaction occurs between party A and party B, the different nodes in the network reach a consensus prior to finalizing the transaction. In this system, there are various mechanisms that allow the network to reach a consensus. (Click here to learn more about the verification process).
Blockchain technology will create a cashless and cardless society. You can order and purchase goods instantly at your fingertips. Depending on the different payment-based blockchain projects’ separate protocols, identity theft and fraudulent transactions can be avoided.
To provide a more specific example, we will be looking into one of the blockchain-based payment systems that are being developed or are in use.
ECP+
As Philippines’ Union Bank has set up the world’s first cryptocurrency ATM, the ability to use cryptocurrency in the real world market is gaining momentum. However, converting this currency into cash, while useful, seems to defeat the purpose of making transactions efficient.
ECP+ is a great example of a transaction system, using blockchain, that is setting up partners all over the world in order to make paying more efficient. Without having to convert the currency into cash, the user will be able to directly pay from the network when purchasing a product or service from a partnered entity. The transaction is not going to happen as it is completely verified that the person attempting to pay is the actual user. It was able to receive a Biometric security certification in order to bring security to the next level. As the number of partners grows, the users will be able to gain more efficiency around the globe and for special cases where only cash is accepted, they will still be able to convert it to cash of any currency.
While ECP+ was featured because it was mainly developed Koreans, and it is the system that I am most familiar with. However, there are more transaction systems and they are definitely worth taking a look at. Blockchain technology is going to be the next generation of payment.
Writer: Yunsoo Kim
Blockbuster Blockchain, CIO | Yale NUS ’23
