Industrial adoption of blockchain is gaining ground in areas such as supply chain management. But what about other places? How comfortable are business leaders with switching from traditional banking networks to using blockchain (or hashgraph) enabled financial services? That’s the question. Global fintech companies, such as Circle, believe that digital currency is breaking into the mainstream. And firms are working hard to build payment infrastructure capable of moving funds at “Internet speed,” expanding the range of promising blockchain applications for businesses.
We live in a digital world. But in many cases, the money still travels on older payment rails – attracting high transaction fees and only being moved during business hours. And for large companies with global operations and hundreds of suppliers and contractors to pay, this is a headache. But maybe not for long. “Blockchain and digital assets have the ability to solve these problems,” Kash Razzaghi, Chief Business Officer at Circle, told TechHQ.
Increase awareness of blockchain solutions for businesses
Razzaghi, who will attend Paris Blockchain Week in March 2023, is keen to raise awareness of enterprise blockchain technology and show companies that alternative payment solutions are now coming online. “We’re getting to the point where the promise of low-cost transmissivity is coming true,” he explains.
Research by Uniswap Labs and Circle, available on the SSRN pre-print repository, highlights some of the cost savings that may be relevant. The team’s analysis takes a broad view, noting that even sending smaller amounts of currency via the chain of foreign exchange and digital cross-border payments can reduce fees by as much as 80%.
Businesses have a lot to gain as digital accounting reduces costs, but they are not the only ones to benefit. Circle launched its USD Coin (USDC) – a so-called stable coin, where every 1 USDC issued is backed by 1 US Dollar held in reserve – in 2018. And the firm has been working with a number of partners to expand the business. In 2022, the global fintech company teamed up with Stripe to expand payment options for content creators on Twitter.
There are many examples of how new digital payment rails, including enterprise blockchain applications, can lead to innovation in the financial sector. Multinational firms, which need to move money internally, do not want to be restricted by banking hours. And blockchain solutions for businesses with digital ledgers can pave the way for more efficient transfer and tracking of funds.
Salary in cryptocurrency?
The capacity for businesses to send and receive money in seconds rather than days or weeks opens up a range of options. Today, employees typically receive a monthly salary. But weekly, daily or even hourly payments become possible when the movement of money is baked into code. Deel, a staffing and payroll company focused on streamlining the process of working with international employees and contractors, offers a service that allows businesses to fund salaries in USDC.
There are plenty of fintech achievements to celebrate. However, it’s fair to say that cryptocurrency has been on a bit of a rollercoaster ride. And business leaders may be wary of signing up for enterprise blockchain solutions. But issues like the threat of bad actors are not isolated to the rise of decentralized finance (DeFi). “People have to trust it and understand it,” Razzaghi said. – There are still things that need to be resolved.
Efforts must be made to make fiat on-ramps (mechanisms that allow users to convert their regular publicly issued currency, such as US dollars, euros or British pounds, into tokens) seamless to attract a wider user base. As analysts have noted, DeFi platforms can have a steep learning curve and be difficult for non-technical users to navigate.
There are also regulatory uncertainties. But Circle has a large policy team and is active in keeping governments and regulatory bodies up to date. USDC attestation reports, conducted by Grant Thornton – a firm that provides insurance, tax and advisory services – are issued monthly and freely available for download.
Users who want to understand more about what to consider when building enterprise blockchain applications can also take advantage of developer resources. Circle and other providers have comprehensive guides to get you started, including compliance considerations. For example, ERC-20 tokens must comply with the on-chain travel rule, which requires remittances of USD 3,000 or more (or equivalent in cryptocurrency) to require the transfer of know-your-customer (KYC) details to the receiving institution.
Enterprise blockchain testing and development
Developer resources are also useful for understanding security threats and mitigating those risks. Circle’s guide has a detailed section on blockchain confirmations (as well as covering many other topics), which includes the associated rearrangements that take place when transactions in a blockchain are packaged into blocks. In this case, operators can protect themselves against bad actors trying to manipulate the system to get back the cryptocurrency (but keep the goods) by waiting for a number of blocks before recognizing the transfer.
Returning to Razzaghi’s comment that people need to understand the principles underlying enterprise blockchain and other DeFi solutions, it is worth drawing attention to the availability of application programming interface (API) sandboxes. These tools allow users to explore the possibilities of fully programmable APIs to simplify payments and enable other account experiences securely – in an isolated and controlled environment. For example, developers can run requests and simulate responses to test that their implementations behave as expected—and are sufficiently robust—before deploying them in a production environment.
