Cross-border payment, three countries

The value brought by Bitcoin has been much more than just the number of beating on the K-line chart. After 10 years of birth, although the price has been cyclically cyclical, Bitcoin and the blockchain technology behind it are irreversibly Accepted by mainstream vision and penetrated into more aspects of our daily lives.

This year, a war around its commercial applications has unnoticed: the use of blockchains and cryptocurrencies to transform cross-border payments.

The rules of the business world are unprofitable. Cross-border payment is a Big Mac-level cake: McKinsey data shows that in 2017 alone, global cross-border payment total revenue was 206.3 billion US dollars, the size of this market reached hundreds of billions of dollars per year, and will be expected It will continue to maintain rapid growth in a few years, and such a substantial profit is enough to make any commercial entity covet.

The emergence of bitcoin and cryptocurrency has enabled almost zero-cost cross-border payment transfers, breaking the traditional business model of tangling and lying down to make money, although in terms of scale, cross-border payments based on cryptocurrency Still only occupy a relatively small proportion, but organizations with a sense of crisis have realized the threat.

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Since the beginning of this year, the genre of traditional financial institutions represented by JP Morgan Chase and VISA, the Internet genre represented by Facebook, and the cryptocurrency genre represented by Ruibo have officially spurred the cross-border payment of the three countries.

Cryptographic currency genre: Bitcoin / Litecoin / Raybo

At the beginning of the birth of Bitcoin, it was not the subject of investment speculation. Nakamoto describes a “peer-to-peer electronic cash system”. Trading with Bitcoin does not require any third-party organization, and it can avoid double-flowering problems. Value delivery can be done over the Internet, which is much more efficient than traditional financial channels and is not subject to administrative divisions.

Based on the above advantages of Bitcoin and good anonymity, early Bitcoin was very popular on the dark network, but with the increase in transaction volume, the block rate of 10 minutes, and the block capacity of 2M, the Bitcoin network was limited. The overall transaction carrying performance, due to the open source code, a lot of time to imitate Bitcoin in the market.

The Litecoin is known as the originator of the altcoin, and it is also the most successful one to transform Bitcoin so far, and its market value is currently ranked in the top 10 in the digital currency market. The success of Litecoin is related to many factors, but it is inseparable from the positioning of its small cross-border payment: Due to the soaring price and handling fees of Bitcoin, it is not suitable for small payments. Litecoin has made up for this blank. More than 4,500 merchants accept Litecoin payments.

Ruibo is different from the former two. From the very beginning, it has been determined to transform the bank and become an inter-bank standard trading agreement. Ruibo believes that the current mainstream Swift cross-border payment system will be eliminated, and the two sides have expressed their views on different occasions. The competitive smell of gunpowder is very strong. In 2018, Ripple announced that it has established cooperation with more than 100 financial institutions, and Ripple can be freely convertible in more than 60 countries around the world.

However, as traditional financial forces recognize the advantages and potential of blockchain technology, they do not seem to be willing to let the cross-border payment channels be handed over. This is the entry force we will mention: investment banking brokers, settlement payments Financial institutions such as giants and industry alliances, each of them firmly grasp the key links of the existing financial system.

Traditional financial genre: JPMorgan Chase / Visa / Swift

On June 25th, Swfit announced that it will work with R3 to develop a global innovation payment (GPI) based on blockchain. Swift is an international interbank settlement organization established in 1973. It has been the global hegemon of the traditional financial world for 45 years, but the efficiency of international settlement through Swift has been questioned in recent years, and even radical Argentine banks announced their withdrawal in 2018. Swift, using the bitcoin network to make international payments.

Swfit may also realize that the international settlement method that has been going on for many years has already reached the eve of the building. The R3 of this cooperation is a blockchain alliance involving more than 42 giant banks around the world. The two sides are undoubtedly intended to use the DLT distribution. Ledger technology for international interbank settlement to increase efficiency and reduce fees.

Unlike Swift, Wall Street financial giant JPMorgan Chase is preparing to issue a digital currency directly to assist customers in cross-border payments. Today, Japanese media reported that JP Morgan Chase's JPM Coin may start trial operation as early as this year, based on JPM Coin. Ethereum's alliance chain platform Quorum is released.

The specific process is that the customer can deposit the US dollar into the designated account of JPMorgan Chase to obtain JMP Coin, and the customer can use JMP Coin for point-to-point transfer in the alliance chain, which can enjoy nearly zero handling fee and real-time settlement efficiency. Then convert JMP Coin to US dollars.

Also as a representative of traditional financial power, Visa also announced the launch of the cross-border payment system B2B Connect on June 12, which has already cooperated with American Commercial Bank, South Korea's Shinhan Bank, Philippine United Bank, and Singapore's Huada Bank. 30 channels and will expand to 90 markets worldwide by the end of 2019.

It can be seen that the traditional financial genre tends to serve large enterprises or financial institutions when using the blockchain to transform cross-border payments, which is quite different from the Facebook Libra we will mention later. At the same time, they like to cooperate with the alliance chain at the technical level, which may be due to the high TPS carrying performance; but at the same time, it cannot be ignored that full compliance is the red line of traditional financial institutions applying blockchain technology, behind the countries. Common anti-money laundering and counter-terrorism financing appeals.

JPMorgan Chase is one of the more unexpected ones. The choice of issuing JMP Coin will face greater resistance in terms of supervision, but the operating mechanism is not new. JMP Coin is similar to the stable currency of mortgage real assets, only within a certain range. Circulation and recognition, the current US regulatory level seems to be much more tolerant of such digital currencies.

In general, the traditional financial forces are forced to reform by the digital currency. When their golden rice bowls are about to be broken, they have to choose to open external cooperation and use blockchain and distributed ledger technology to enhance the customer experience. But in the early days, only large cross-border payments between enterprises and banks should be able to enjoy this convenience.

Internet Genre: Facebook Libra

The most popular industry news in the near future is the Libra stable currency launched by Facebook. The significance of this is that digital currency will no longer be limited to niche people, nor will it be used only between enterprises and banks. Large cross-border payments, but directly push digital currency to the world's 2.7 billion ordinary Internet users.

Traditionally, there is no direct competition between the Internet industry and the financial industry, but the emergence of Bitcoin directly penetrates the secondary wall of both, giving Internet practitioners the opportunity to directly enter the financial industry with higher policy and regulatory thresholds.

Internet companies have a large number of users, high-frequency life application scenarios, and have a force to be reckoned with in competition with traditional financial institutions. In China's mobile payment war, Alipay and WeChat firmly control the position of the industry's top spot. Even if the UnionPay is invested in a huge amount of subsidies similar to the current year, it may not be able to dig a corner of the mobile payment market. .

For cross-border payments, the launch of Facebook Libra gives ordinary people the opportunity to make cheap and efficient C2C cross-border transfers for the first time. It is no exaggeration to say that this is a historic event, even an intention. The iconic action of overthrowing the huge traditional financial system is a declaration of war on the Internet.

From the perspective of the reshaping of social life scenes by Alipay and WeChat payment, Libra, which has brought in 100 international industry giants, has broken through the supervision of various countries and realized the explosiveness of the application. All of today's analysis and predictions are pale and powerless. After 10 years of bitcoin controversy and careful advancement of traditional financial forces, Facebook's courage and ambition are full of respect.

Edit: Cook

Source: Originally produced by ZB Research Institute

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