Cross-border payments have always been tricky territory. Traditional banking methods come with a higher cost, lengthy delays and security concerns. It can hinder growth for businesses with global suppliers and customers. This will only become more apparent in the coming years as globalisation continues to speed up.
Crypto, for all its achievements and what it hopes to be, has created a new type of “border” related issue. Indeed, value is now locked within networks — call it cross-chain borders. The lack of a unified on-chain experience is preventing the adoption of crypto payments. Unified doesn’t equal centralised – an important distinction to make.
The current crypto landscape is fragmented, with a steep learning curve for the everyday user. The many independent blockchains, and the need for token-specific payments, creates added complexities to on-chain transactions.
Achieving cross-chain interoperability doesn’t just elevate the global crypto industry – there are localised benefits for regions who embrace it.
Asia-Pacific has the highest value of cross-border payments. In 2023, cross-border payments in Asia increased by over 30 per cent. It’s such a hot issue that four central banks in Southeast Asia have teamed up to build an instant cross-border retail payments platform.
But big banks banding together isn’t the answer. Interoperable blockchains are. Blockchain technology will have its mainstream moment when different chains communicate seamlessly, so users can pay anyone, anytime, anywhere.
And this technology already exists.
Solving financial fragmentation
Unified cross-chain payment platforms for crypto and fiat currencies exist, which removes the need for banks, multiple wallets, bridging or seed phrases. It’s underpinned by an omni-chain ID, a universal payment ID aggregating wallets, accounts, and DIDs – like a new swift code.
Programmable payments and one-click cross-chain transactions simplify the user experience and makes financial transactions across borders effortless. With smoother cross-chain asset movement – regardless of currency, token, wallet, app or blockchain – the increase in value flow will lead to more liquidity and innovation.
Users can bypass centralised exchanges for trading between different cryptocurrencies – further reducing the reliance on custodial platforms, fees, risks of exchange hacks, and the need to entrust third parties with private keys.
This means an individual can use Bitcoin to participate in lending or staking on Ethereum-based DeFi protocols, through interoperability solutions such as wrapped tokens or cross-chain bridges.
Being less dogmatic about our decentralised chain of choice (Bitcoin maxis vs Ethereum evangelists) will promote participation in different ecosystems and open up the space to people who are intimidated by crypto culture. A unified on-chain payments experience is the future. No single blockchain should dominate.
Also Read: On-chain analytics firm Nansen acquires staking provider stakeWithUs
Benefits beyond banking
Omni-chain infrastructure has the potential to extend far beyond purely financial transactions. It can revolutionise other industries that require cross-border payments such as supply chain management, healthcare, and entertainment.
Companies can manage supply chains with greater efficiency by ensuring payments and data move seamlessly between multiple blockchains, improving operational efficiency. With the world’s reliance on Asia for consumer goods, the region is well-positioned to adopt blockchain technologies.
With Southeast Asia being a key region for web3 gaming, the growing number of developers also stand to benefit from cross-chain interoperability. When blockchains can communicate seamlessly, it opens up new possibilities for applications to interact with multiple chains – without needing to manage the complexities of bridging between them.
For example, developers can deploy decentralised finance applications that tap into liquidity across several blockchains, rather than being constrained to one ecosystem. This flexibility fosters a more dynamic and interconnected on-chain environment, where developers can experiment and iterate faster, driving the next wave of blockchain-based innovations.
The easier it is to build, the faster it’ll be to onboard new users into web3 – without users having to worry about what chain they’re on.
The key to connecting people across borders and blockchains
Interoperability is the missing component that will unlock crypto’s true potential, well beyond the industry itself. The decentralisation movement started with DeFi, but it failed to solve the fundamental flaws of cross-border transactions – with disparate blockchains recreating and repacking the silos of the past.
By leveraging technologies that enable cross-chain interoperability, we can move away from centralised intermediaries, which was crypto’s original intention.
It’s time to redefine crypto payment solutions and open web3 up to the world.
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