OKX Blockchain 60 Lectures | Episode 56: What is Blockchain + Cross-border Payment

Hello everyone, I'm Xiao K. Today we're going to talk about: "What is Blockchain + Cross-border Payment"?

The so-called "blockchain + cross-border payment" refers to applying blockchain technology to the cross-border payment field. Blockchain + cross-border payment is a disruptive application scenario, and it may even reconstruct the existing international financial network. Why do we say this? The reason is that blockchain technology can bypass the existing SWIFT system and completely solve the fund settlement issues in cross-border transfers.

Let us explain this in detail below.

Regarding traditional cross-border transfer methods, typically we need to go to a bank counter, fill out relevant wire transfer forms, and then wait at least one to two weeks for the money to be transferred. For large trade wire transfers, this cycle takes even longer. The reason it takes so long is that our funds, during the transfer process, need to go through an institution called "SWIFT." "SWIFT" stands for Society for Worldwide Interbank Financial Telecommunication and mainly provides settlement services for banks around the world.

When Bank A wants to transfer money to Bank C, during SWIFT processing, it does not directly complete the transfer from A to C. Instead, it first matches interbank accounts using SWIFT's user lending relationships, account associations, and other connections, then matches an optimal path and transfers the money layer by layer. The entire path goes from Bank A to Bank B, then to Bank C.

When the transfer amount is relatively large, the funds may need to be split into many smaller transfers, each completed through different paths, with each portion of funds also requiring a new path match and going through the A-B-C process. Additionally, at each step of the funds journey, every bank involved needs to be settled once again through SWIFT's centralized system, which results in traditional cross-border transfers having drawbacks such as complicated processes and long cycles.

When blockchain technology is applied in the cross-border payment field, it is completely different. It essentially reconstructs a new decentralized transfer network, bypassing the SWIFT network, and based on the nature of blockchain networks, the data is transparent, verifiable, and tamper-proof.

Furthermore, when blockchain handles cross-border payments, the fundamental difference from the traditional SWIFT network is that SWIFT is essentially the transfer of cash, while blockchain is essentially the transfer of information. When using blockchain for cross-border transfers, the funds go directly from A to C, and even the slowest public chain on blockchain can complete transfers within one hour, with no long trading delays. Therefore, applying blockchain to cross-border payments is truly groundbreaking.

Currently, blockchain + cross-border payment is a huge market of 25 to 30 trillion USD. Major domestic and international financial giants such as Ant Group and JPMorgan have already launched related products. It is believed that as cross-border payments combine with blockchain technology in the future, the next financial blue ocean will emerge, building a brand-new financial era.

Special thanks to Professor Chang Yong for his assistance and guidance on this episode.

– END –

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