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How do 𝐛𝐥𝐨𝐜𝐤𝐜𝐡𝐚𝐢𝐧𝐬 change digital wallets?

 

Why do Visa and PayPal invest in blockchain payment infra?
Is it really 𝒅𝒊𝒔𝒓𝒖𝒑𝒕𝒊𝒗𝒆?


The diagram below shows the differences.

𝐈𝐧 𝐛𝐚𝐧𝐤𝐢𝐧𝐠 𝐬𝐲𝐬𝐭𝐞𝐦𝐬
🔹Deposit process: Bob goes to Bank of America (BoA) to open an account and deposit $100. A new account B1234 is created in the wallet system for Bob. The cash goes to the bank’s vault and now Bob’s wallet has $100. If Bob wants to use the banking services provided by Citi Bank, he needs to go through the process all over again.

🔹Transfer process: Bob opens BoA’s App and transfers $50 to Alice’s account in Citi. The amount is deducted from Bob’s account B1234 and increased in Alice’s account C512. The actual cash movement doesn’t happen in real-time. It happens after BoA and Citi settle the transactions at end-of-day.

🔹Withdraw process: Bob withdraws the rest $50 from account B1234. The amount is deducted from B1234, and Bob gets the cash.

𝐖𝐢𝐭𝐡 𝐁𝐥𝐨𝐜𝐤𝐜𝐡𝐚𝐢𝐧𝐬
🔹Deposit & Withdraw: Blockchains support cryptocurrencies, no cash involved. Bob needs to generate an address as transfer receipient and store the private key into a crypto wallet like MetaMask. Then Bob can receive cryptocurrencies.

🔹Transfer: Bob opens Metamask and enters Alice’s address and 2 ETHs. Then Bob signs the transaction to authorize the transfer with the private key. When this transaction is confirmed on blockchains, Bob’s address has 8 ETHs and Alice’s address has 101 ETHs.

👉 Have you spotted the differences?
Blockchains, as distributed ledgers, provide a unified interface to handle common operations we perform on wallets. Instead of opening multiple accounts in different banks, we just need to open one account on blockchains, which is the address.

All the transfers are confirmed on blockchains in pseudo real-time, saving us the time spent on end-of-day reconciliations.

With blockchains, we can merge the wallet services in different banks into one global service.

👉 Over to you: How would you leverage blockchains to renovate payments?

Click Follow for more Web3 Illustrations. Hua Li

#systemdesign #web3 #blockchain

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