Cryptocurrencies have had a substantial effect on the global finance industry. Through peer-to-peer transactions, digital assets have decentralized traditional financial systems and simplified access for the average person. Although cryptocurrencies are speculative and highly volatile, the industry has evolved to the point where interested users can enjoy many perks without worrying about downsides.
Digital assets play essential roles in several industries. In music, a few artists have minted non-fungible tokens (NFTs) linked to specific songs or albums to build closer relationships with fans. In sports, teams may use fan tokens for exclusive ticket access or voting rights. The use of cryptocurrencies also extends to online gambling, especially with no limit sites that give players complete freedom when gambling. Players interested in dabbling into crypto gambling can learn using educational resources with extensive details, such as this guide from Techopedia’s Sergio Zammit, accurately defining no limit sites and reviewing several options. Nonetheless, one of the most popular uses of cryptocurrencies is for large payments.
Problems with Large Conventional Payments
The current financial infrastructure that supports large traditional payments is inefficient. This problem is more evident with cross-border transactions where processing requires several middlemen. The intermediaries slow the process because each one must satisfy a few checkboxes before passing the payment to the next.
In addition, these payments may be subject to regulatory requirements, especially when they require conversion between currencies. A combination of regulatory hurdles and multiple intermediaries makes these transactions costly and reduces the final amount deposited.
Benefits of Using Cryptocurrencies for Large Payments
- Cheap Costs: Since cryptocurrency transactions are powered by blockchain technology, intermediaries that raise transaction costs are absent. Nearly anyone can send any amount of cryptocurrencies from one wallet to another and pay minimal charges depending on the blockchain network used. This way, the recipient receives nearly the same amount initiated by the sender. In 2022, a crypto whale completed a transaction worth more than 50,500 BTC (about $1 billion at the time) and only spent 50 cents in transaction charges.
- Security: Crypto transactions are secure because the blockchain permanently records all data. Since editing or deleting transactions is nearly impossible, anyone can audit the blockchain to confirm payments anytime. The blockchain’s security is a primary reason why many people now trust cryptocurrency transactions for large payments because all transaction data is public.
- Speed: Transactions completed on a blockchain are instantaneous. Anyone can confirm a transaction within seconds regardless of the sender’s location or transaction amount. Also, large crypto payments do not encounter regulatory hurdles like in the traditional market and do not require special infrastructure to process.
- Accessibility: Unlike traditional payments, crypto transactions have a low entry barrier. Digital assets are usable by anyone with an internet connection and a suitable device. Within a few minutes, persons who need to make large payments can register at a crypto exchange, purchase cryptocurrencies, and send them to a recipient anywhere in the world. This is a trusted solution even for jurisdictions with limited access to traditional financial services.
Real-World Use Cases for Large Cryptocurrency Transactions
- Corporate Transactions: Cryptocurrencies provide an easy platform for organizations and corporate bodies to make large payments by leveraging blockchain technology. Firstly, the option is cost-effective, especially for large transactions associated with supply chain payments, mergers, or acquisitions. Secondly, It reduces the administrative burden required to complete these transactions, as typical red tape associated with payments is considerably reduced or eliminated.
- International Trade: With crypto, sellers and buyers across the globe no longer have to worry about currency transactions and regulatory impediments. Merchants and service providers that support crypto payments become exposed to a global audience of potential business partners and customers. Crypto transactions can help these entities complete large payments and close business deals that were otherwise impossible or considerably difficult.
- Remittances: Sending large amounts of money is easy via cryptocurrencies. People in the diaspora who need to cater to family and friends can make regular large crypto payments without worrying about exorbitant fees.
Challenges to Using Crypto for Large Transactions
- Scalability: Several blockchain networks are plagued by scalability issues. The blockchains sometimes cannot handle the volume of transactions initiated and may become slow or require high transaction fees. Scalability is one of the most common criticisms for many blockchain networks and a significant impediment to global adoption. Fortunately, layer 2 networks and sidechains considerably help to solve this problem.
- Volatility: Recipients can still lose a chunk of funds transferred because of the inherent volatility in most decentralized cryptocurrencies. Cryptocurrencies are so unstable that they can shed significant value in the time it takes for the blockchain to fully process a transaction.
- Regulatory Uncertainty: Since crypto laws are still evolving, changes in regulatory requirements can be problematic for crypto users. These changes may affect large payments, sometimes requiring trading platforms or crypto exchanges to notify specific authorities of transactions that cross particular thresholds. In other cases, jurisdictions may be generally averse to cryptocurrency payments and enforce strict rules
Conclusion
The cryptocurrency landscape benefits users looking for easy ways to conduct large payments. Several industries can take advantage of the ease and leverage the anonymity of the blockchain for increased anonymity. This could be particularly helpful to people focused on privacy, such as players with large bankrolls at a crypto casino, who can now make large bets at crypto poker or blackjack games without worrying about risking personal identifying information. As the sector evolves and blockchain developers improve scalability, there will likely be increased global acceptance for cryptocurrencies to be used for small and large transactions.
