Many banks have increased the security levels around their apps, making it hard to compete against established players. And payment apps are still limited in their capabilities.
Peer To Peer Payment- History And Development:
The history of P2P payment in banking dates back to the existence of cash. Cash as a currency is effortless; anyone can use it, and physical notes are much more complex to steal than digital data. As money gradually evolved from physical to digital, the usual form of payment shifted to credit or debit cards, as they are straightforward and widespread.
However, banks have never allowed users to make direct payments amongst each other with their platforms.
The Inception Of Blockchain:
Bitcoin was released in 2009 as an open-source project, offering several advantages over traditional currencies.
Firstly, transactions are fully transparent on a public ledger called a blockchain— it cannot be changed or altered. All users have access to this information; therefore, there is no risk of fraud or other types of manipulation.
Blockchain also offers unbreakable security, employing a cryptographic hash algorithm to ensure that no user can tamper with the data in any way. The combination of blockchain technologies and P2P payment apps could revolutionize the banking industry.
The Main Advantages Brought By Bitcoin:
The absence of a central authority overseeing Bitcoin’s transactions means no government or banks are involved with the process.
A fixed number of Bitcoins will be released into the market (market cap), and their value will only change due to supply/demand dynamics instead of inflation.
A Robust Peer-to-Peer Payment System:
A P2P payment system is an app that allows users to send and receive money directly from one another without a third party. P2P payment apps usually have low-security standards as they only include a limited number of features.
Breaking Down Security In A P2P Payment App Into Three Main Components:
The wallet system where users store all their money
Tokenization of funds; meaning that once a transaction is done, it does not have to take place on the blockchain but only be registered in the ledger as an available balance
Authentication of the user’s identity to ensure that there is only one account associated with each session
Security should not be seen as a limiting factor for P2P payment apps but rather as a means to increase their attractiveness to take on more ambitious challenges like replacing national currencies.
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