A decentralized payment network refers to a system where users, customers and vendors can exchange money without having to trust any third party to keep the network secure and operational.
A decentralized payment network refers to a system where users, customers and vendors can exchange money without having to trust any third party to keep the network secure and operational. These networks are possible thanks to the globalization of internet access and are built using blockchains, which bring different degrees of decentralization, scalability and security.
A centralized payment network can be anything from a bank to a remittance company. Cash, as any physical centralized currency, still relies on central banks and governments to maintain its legitimacy and tackle threats like counterfeiting. This also means that governments can influence central bankers to modify their monetary policy.
These issues related to centralization are being solved by distributed ledger technology built on the blockchain. The main advantages of decentralized payment systems are that they are much cheaper, increase transparency, are more reliable and less prone to hacks and corruption than centralized networks.
Finally, decentralized payment networks have the ability to bring financial services to millions of people globally and empower people to have greater control over their financial future.
Author:
Jeff Prestes is a business administrator and blockchain applications Aachitect at MB Digital Assets and a senior blockchain developer at Hermez Network. He’s a professor and responsible for the Smart Contracts Programming course at the Pontifical Catholic University of São Paulo/Brazil (PUC- SP). He has over 20 years of experience in software development in international companies.
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