The shortcomings of current transaction systems

Throughout history, instruments of trust, such as minted coins, paper money, letters of credit, and banking systems, have emerged to facilitate the exchange of value and protect buyers and sellers. Important innovations (for example, telephone lines, credit card systems, the Internet, and mobile technologies) have improved the convenience, speed, and efficiency of transactions while shrinking — and sometimes virtually eliminating — the distance between buyers and sellers.

In spite of this, many business transactions remain inefficient, expensive, and vulnerable, suffering from the following limitations:

• Cash is useful only in local transactions and in relatively small amounts.
• The time between transaction and settlement can be long.
• Duplication of effort and the need for third-party validation and/or the presence of intermediaries add to inefficiencies.
• Fraud, cyberattacks, and even simple mistakes add to the cost and complexity of doing business, exposing all participants in the network to risk if a central system — such as a bank — is compromised.
• Credit card organizations are walled gardens with a high price of entry. Merchants must pay the high costs of onboarding, which often involves considerable paperwork and a time-consuming vetting process.
• Half of the world’s people don’t have access to bank accounts, requiring them to develop parallel payment systems to conduct transactions.
• Limited transparency and inconsistent information hinder the efficient movement of goods in the shipping industry.

Transaction volumes worldwide are growing exponentially and will surely magnify the complexities, vulnerabilities, inefficiencies, and costs of current transaction systems. The growth of ecommerce, online banking, and in-app purchases, coupled with the increasing mobility of people around the world, have fueled the growth of transaction volumes. And transaction volumes have exploded with the rise of Internet of Things (IoT) — autonomous objects, such as refrigerators that buy groceries when supplies are running low and cars that deliver themselves to your door, stopping for fuel along the way.

To address these challenges and others, the world needs faster payment networks that provide mechanisms to establish trust, require no specialized equipment, have no chargebacks or monthly fees, and offer a collective bookkeeping solution for ensuring transparency and trust.