The head of the blockchain division of Facebook, David Markus, in his blog spoke about the shortcomings of traditional payment systems and why you need to switch to systems based on the blockchain.
"As I've been traveling around the world meeting with key stakeholders, it became clear to me that the advantages of digital currency transmitted over a blockchain — notably when it comes to broadening access and lowering costs of financial services — weren't as evident to others as I assumed they were," Marcus began his story.
I'm often asked why we didn't take a more traditional route of building a payment system on top of existing rails, instead of the more ambitious route we've chosen. I tried to find a good concise write-up about the advantages of a new core network to move money around, and couldn't find one, so I thought it would be a good idea to take a stab at it,"he writes.
According to Marcus, existing payment systems are very limited. They were created in the 1960s and 1970s. Undoubtedly, they were supplemented several times, but these updates simply fell on top of the old infrastructure. Therefore, the effectiveness and scope of existing solutions is limited. For example, a user can transfer money between wallets within the same structure, but cannot freely transfer them to a wallet created by a third-party company.
"Moving money from point A to point B requires a number of intermediaries to be involved, and often demands liquidity pools to be readily available at point B for consumers to get their money out in a timely fashion. This means delays, and added cost at every step of the way,"he writes.
Systems based on blockchain technology can carry out transactions in almost real time without any barriers in the form of state borders. At the same time, commission costs will be minimal, and there is no need to attract liquidity pools or use different currencies.
"Thanks to this, it is possible to significantly reduce the cost of intermediaries, eliminate operational difficulties, while increasing the innovativeness and accessibility of the system. People can transfer money without obstacles. That is why we decided to go on an ambitious path and why we are determined to complete the work we have begun. People all over the world deserve the best, and it's time to change the current payment system,"says Marcus.