The United States Federal Reserves clarified that its payment system FedNow is likely to launch by July this year. There are still about months until the launch of the US central bank’s quite anticipated payment system. Yet, it started getting attention and started posing itself as a replacement for many existing cross-border payment systems. This includes payment protocols like Ripple (XRP) and Stellar Lumens (XLM), and multiple stablecoins, which facilitate ultra-cheaper and faster value transfer methods than the traditional methods.
FedNow will likely make the fund’s transfer in the US dollar across financial institutions, like banks, relatively faster and will charge ultra-low costs. It is reportedly a medium to initiate peer-to-peer (P2P), business-to-business and business-to-consumer (B2C) transactions.
Undoubtedly the upcoming payment system will have superiority over the existing centralized payment system. The latter has a slow process that takes days to process payments in the name of business days. Moreover, limited banking hours, in particular, also make it an issue.
With FedNow, the payments within financial entities will be done instantly and will be beneficial for businesses that rely on continued cash flow. The 24*7 availability of the upcoming payment system will eliminate the issue with time and be readily available for cash deposits or withdrawals.
Though all this could be cited as an end for blockchain-based crypto payment systems, it should also be kept in mind where the revolution got sparked. The world might only deal with minor banking payment system updates, not cryptocurrency-based payment solutions.
The inception of Bitcoin (BTC) proved the theory of peer-to-peer (P2P) transactions without any intermediary is possible using blockchain as the underlying technology. The development in the technology and smoothening of decentralized payment methods went on to revolutionize the systems.
Stablecoins emerged as an alternative to fiat currencies with fascinating features of cryptocurrencies like:
- Faster transaction speed,
- Cross-border payments, and
- Low transaction fees.
Payment protocols like— Ripple (XRP) and Stellar Lumens (XLM) have redefined international payments with unprecedented advantages.
Crypto and blockchain-based payment solutions have given a push to the traditional financial system. Initiatives like central bank digital currencies (CBDCs) and payment settlement programs like FedNow will likely result from those efforts that came in the wake of competing with the burgeoning decentralized financial system.
However, the other boasted features of FedNow, like its ultra-low transaction fees, could potentially threaten Ripple or Stellar-like protocols. Yet the challenge will long last or push the other revolution down the road; it would be a matter of time.
Source: https://www.thecoinrepublic.com/2023/04/05/is-fednow-a-better-alternative-to-ripple-and-stellar-lumens/