Who Will Win the Blockchain Payment Race?
(Photo : Who Will Win the Blockchain Payment Race? )

When Satoshi Nakamoto created Bitcoin, the original intention, as stated in the white paper, was for it to be "a peer-to-peer electronic cash system." For the avoidance of any doubt, Satoshi referred to "the possibility for small casual transactions" and the concepts of disputes between merchants and buyers in the introductory paragraph. Therefore, Satoshi's objective that Bitcoin was a medium of exchange was in evidence from the very beginning.

Of course, Bitcoin's inherent scalability issues became apparent from its earliest days. Expecting merchants and customers to stand at a checkout waiting ten minutes or more for a transaction to clear was never realistic.

However, in building Bitcoin, Satoshi had proven what was possible, and the world's first blockchain-based cryptocurrency quickly gained a cult following. But people weren't adopting Bitcoin because they wanted to spend it. Most people who bought it believed in a future where Bitcoin would be a valuable asset, so they held it as a long-term store of value.

Over the years, as Bitcoin became more popular, a new generation of innovators decided to revive the idea of "small casual transactions" with the Lightning Network. By creating a system of off-chain payment channels, two parties can send small amounts of Bitcoin between themselves instantly and securely, effectively solving Bitcoin's "spend ability" problem.

Nevertheless, Bitcoin as a spending currency simply hasn't taken off. In the finance pages, among institutions and retail users, and the entire cryptocurrency community, Bitcoin is an investment asset. You're more likely to see BTC compared with gold and stocks than US dollars or euros.

The Rise of Blockchain Payment Networks

By the time Lightning Network was in development, another group of innovators had identified that blockchain makes an ideal payment layer. However, they decided to implement their own platform and currency. Chris Larsen and Jed McCaleb released the first version of Ripple in 2012, targeting settlement and remittance systems. Unlike Bitcoin, which uses a decentralized proof of work consensus, Ripple consensus relies on a fixed group of servers to confirm transactions.

The Rise of Blockchain Payment Networks

XRP, the currency associated with Ripple, was designed to be a bridge or settlement currency, allowing users of the network to transact seamlessly between any two assets with XRP as the intermediary.

An important point to note about Ripple is its relationship with the XRP currency, which has been somewhat nebulous over the years. The company has always operated a variety of products, not all of which utilize XRP. In 2019, Ripple rebranded its main payment network to RippleNet, while the XRP ledger became the main ledger for facilitating XRP payments.

But in December 2020, Ripple suffered a significant blow when the US Securities and Exchange Commission filed a lawsuit against the company, alleging that XRP is a security. Now, the company's management, which includes founder Chris Larson and CEO Brad Garlinghouse, stands accused of illegal securities dealings.

The Competition Emerges

Meanwhile, Ripple hasn't been the only project to spot the need for a comprehensive payment and settlement network. XinFin is an enterprise blockchain platform supporting trade finance, which has been making impressive headway in its native region of SouthEast Asia. It runs a live mainnet called the XDC Network, supporting over 100 institutions and over 10,000 wallets holding a balance of the platform's XDC token.

Unlike the XRP ledger, which simply settles payments, XinFin currently runs over a dozen decentralized applications on its regulatory compliant smart contract platform. These include TradeFinex, a network for trade finance originators to distribute deals to the growing base of alternative asset investors, and Globiance, a regulated stablecoin issuer based in Singapore, which manages stablecoins backed by Singapore dollars, Hong Kong dollars, and euros. MyContract is another XinFin service, providing ready-made oracle solutions for developers on the network, allowing them to tap into a wide array of external data sources.

XinFin operates as a hybrid public-private blockchain running on a delegated proof of stake consensus. As a hybrid blockchain, The XDC Network has close connections with applications running on enterprise platforms such as R3 Corda. This provides the platform's enterprise users with full control over their privacy and speed, with the additional security benefits of a public network.

Two Big Fish

Although Ripple and XinFin have been operating in different geographies to date, it seems evident that they'll begin to fish in the same enterprise client waters at some point as both projects expand. However, Ripple is currently in the most precarious position due to the pending lawsuit.

The latest developments seem to be working in the firm's favor, but there are no guarantees it will win the case or that the SEC won't find another angle to exploit for a future lawsuit. In this sense, being in the more blockchain-friendly Asian region, XinFin has the advantage.

One thing is certain - while Bitcoin may not fulfill Satoshi's original vision of being a medium of exchange, there are plenty of contenders willing to deploy variations of Satoshi's technology for more effective payment solutions.

ⓒ 2024 TECHTIMES.com All rights reserved. Do not reproduce without permission.
* This is a contributed article and this content does not necessarily represent the views of techtimes.com
Join the Discussion