Using Blockchain for Payment Services
What are the inefficiencies of using blockchain technology for payment services?
Many Registers of digital tokens have real time and computing inefficiencies. As transaction records on the Register are the only way to prove ownership of digital assets, the real-time processing of recording the transaction of the token’s blockchain becomes critical for users that purchase digital payment tokens for payment services.
Consider Bitcoin. Any Bitcoin transaction needs to be approved by the Register before it is recorded. The Bitcoin Register has set a standard of 6 confirmations that a transfer needs before you can consider it complete. Computing nodes that update the Register (“Miners”) of the Bitcoin Register prioritize validating transactions by the fee that they receive for confirming them. Therefore, if you pay a higher fee, a Miner is more likely to process your transfer which decreases the transaction time thereby reflecting your digital assets earlier on the Register.
Consequently, depending on how much is paid or if any digital asset is paid at all, a transaction can take anywhere between to 1 to 24 hours. For payment services practicality, a transaction lag exceeding seconds defeats the processing of real time transactions in today’s age. Imagine taking 1 to 24 hours to buy a can of coke with Bitcoin. Nevertheless, even in view of these impracticalities, the industry recognizes the heavy adoption of blockchain technology for payment services by consumers and businesses as inevitable.