Blockchain technology works as a digital accounting system that records and confirms cryptocurrency (digital or virtual currency) transactions. It stores information about each transaction of purchase, sale or exchange of cryptocurrency in special blocks. These blocks are combined into a chain, creating a chronological history of events.
Sergey Kondratenko, an expert in the field of fintech, reports that the peculiarity of the blockchain is its security and transparency. This is because each block is immutable and visible to everyone. It is not under central management. The specialist adds that cryptocurrencies such as Bitcoin and Ethereum use blockchain to securely process and record transactions.
Sergei Kondratenko is a recognized specialist in a wide range of e-commerce services with years of experience. Now Sergey is the owner and leader of a group of companies that are not only engaged in various segments of e-commerce, but also successfully operate in various jurisdictions, represented on all continents of the world. The main goal is to generate new traffic, create and deliver an online experience that endears users to the brand and converts visitors into customers, while maximizing the overall profitability of the online business.
Principles of using blockchain and cryptocurrencies in the financial sector
Blockchain and cryptocurrencies are two important elements in the world of digital finance. They are widely used in fintech for various purposes. Sergey Kondratenko highlights some of the most common ways to use them:
- Transfers and international payments. Cryptocurrencies allow you to make fast and relatively cheap international money transfers, without the involvement of banks and intermediaries. This is especially useful for international business transactions.
- Accounting systems and registers. Blockchain can be used to maintain asset records and provide ownership transparency. This can be useful for financial reporting, securities administration and even voting at shareholder meetings.
- Credit and credit transactions. Blockchain-based smart contracts can automate loan origination and management processes, reducing costs and risks for credit institutions and borrowers.
- Stock markets and trading. The securities market uses blockchain technology to speed up and simplify transaction processes. Some companies even issue tokens, which represent securities on the blockchain.
- Financial control and asset management. Cryptocurrency wallets and apps provide investors with the means to manage their assets, monitor their portfolio and conduct financial transactions.
- Financing via ICO and STO. Initial Coin Offerings (ICOs) and Security Token Offerings (STOs) allow startups and companies to increase investments through the issuance of cryptocurrency tokens.
- Microfinance and donations. Charities can use cryptocurrencies to raise money and ensure transparency in the use of funds.
- Ensuring data security. Blockchain can be used to protect financial data, such as customer identification and transaction history, from fraud and unauthorized access.
Sergey Kondratenko: Traditional digital payments versus crypto payments
Cryptocurrencies can contribute to financial inclusion due to their affordability, decentralized nature and ability to conduct cross-border transactions. According to Sergey Kondratenko, they can also create opportunities for people and small businesses that previously had limited access to banking services due to institutional restrictions.
How do cryptocurrencies help expand access to financial services?
First, they are not controlled by a central government or traditional financial institutions, making them independent of the banking system. As the expert notes, cryptocurrencies provide the opportunity to conduct cross-border transactions, which facilitates the transfer of money between countries. They also reduce the costs of financial transactions, making them accessible to low-income people and entrepreneurs.
– Traditional financial institutions often charge high fees for international transfers, which can be a significant burden for residents of developing countries. Cryptocurrencies offer a faster and cheaper way to transfer money, says Sergei Kondratenko.
In many parts of the world, traditional banking systems are underdeveloped, limiting people’s access to essential financial services such as loans, savings accounts and insurance.
Cryptocurrencies can provide these services through decentralized applications (DApps) running on blockchain networks. For example, DApps like AAVE, Compound, and MakerDAO allow users to earn interest on their cryptocurrency assets or borrow against them without having to go to a traditional bank.
Cryptocurrencies also provide access to financial opportunities for those who do not have access to banking services. They can also serve as a store of value, especially for residents of high-inflation countries. They therefore offer an alternative to maintaining and increasing savings.
Sergey Kondratenko: What is crypto processing and what is its role in simplifying cryptocurrency transactions?
Cryptoprocessing is the process of processing payments using cryptocurrency. Sergey Kondratenko lists some key functions that cryptocurrency payment gateways perform:
- Registration of payer data. They record information about the buyer and his order.
- Accept payments from buyers. Payment gateways accept cryptocurrency payments from buyers.
- Sending transaction data to the blockchain and recording node confirmations. After the gateway receives the payment details, it sends the corresponding transaction to the blockchain and waits for confirmation from network nodes.
- Converting the received cryptocurrency into fiat (at the request of the seller). Some merchants want to receive payments in cryptocurrency, while others prefer to convert them to traditional money such as dollars or euros.
- Transfer of payments to the seller.When the transaction receives the required number of confirmations, the gateway transfers the received funds to the merchant.
- Providing confirmation to the parties to the transaction about payment processing. Once the process is complete, the gateway will provide both the buyer and seller with confirmation that the payment has been successfully processed.
– Payment gateways thus facilitate the process of making payments using cryptocurrency and contribute to the spread of transactions in the field of online commerce, Sergey Kondratenko summarizes the main functional areas of crypto processing.
Sergey Kondratenko: How do cryptocurrency payments work?
The expert reports that crypto processing is currently widely used by online stores, gambling companies, travel agencies and other companies that provide services or goods for money.
To pay for a product or service with cryptocurrency, you will be asked to follow a special link to the payment page created by the crypto processing service. Usually, a limited time is given to complete the transaction. This is due to the high volatility of the cryptocurrency exchange rate.
The specialist says that there are two main types of crypto processors for processing cryptocurrency payments:
- Crypto-Fiat processor. In this type of payment processing, the merchant receives fiat money into his bank account after converting the cryptocurrency.
- Crypto-Crypto processor. With this type, the seller receives cryptocurrency in the category he prefers. No matter how many different cryptocurrencies they accept, payment will only be made in one of them.
Regardless of the type chosen, the crypto processor is responsible for performing conversion operations, managing currency risks and ensuring the transfer of assets to the seller’s crypto wallet. explains Sergei Kondratenko.
The expert emphasizes that blockchain and cryptocurrencies offer the modern financial sector a number of important advantages. They promote decentralization and provide a high level of security and transparency of transactions. Cryptocurrency transactions, in turn, are characterized by low commissions and instantaneous execution speed, and also provide access to financial services for a wide range of users. That is, blockchain and cryptocurrencies, according to Sergey Kondratenko, stimulate innovation and simplify global trade, making them key elements of modern financial transformation.
