—TechRound does not recommend or endorse any financial, investment or gambling practices. All articles are purely informational—
Cryptocurrencies have become popular and widely adopted in recent years because of the benefits that they offer users, including quick transaction times. This is in contrast to traditional payment methods, which can sometimes take days to be confirmed.
Digital currency payments are notably faster than fiat methods for a variety of reasons, including the technology that cryptocurrencies use, called blockchain, consensus mechanisms, smart contracts, and their constant availability.
Industries Utilising Crypto Speed For Transactions
Digital currencies were once a niche financial asset mostly used for investment purposes. However, various industries have begun adopting crypto to take advantage of its many perks, including how quickly it can transfer funds from one party to another. Some of the top industries utilising crypto for its speed include:
Travel and Tourism: Globe trotters can book airfare, hotel stays, and tours using crypto like Bitcoin and Ethereum. Many travelers find crypto’s quick transaction times ideal for paying for travel while they are on the go or even mid-trip, as transactions are confirmed quickly and the recipient is able to offer services, like tours or accommodation, straight away with no delay.
Online Casinos: Online wagering has become a popular pastime, with crypto casinos leading the way. Crypto casinos allow bettors to buy in, wager, and withdraw funds using digital currency. Quick transactions are ideal for players who want to fund their accounts quickly as well as withdraw winnings without delay.
Crypto expert and writer Kane Pepi shares that crypto casinos have grown in popularity with the increased adoption of cryptocurrencies worldwide, especially in countries like the UK. The best crypto casinos UK offer players a wide range of games and accept coins like Bitcoin and many others. Beyond quick transactions, cryptocurrency also allows players to wager anonymously online, with dedicated anonymous casinos catering to players who prefer to keep their identities private.
Commerce: Purchasing goods, like clothing, with cryptocurrency, has become popular. A growing number of retailers have started accepting crypto as a method of payment. Quick transaction times are crucial, as customers do not want to wait for their payment to be confirmed before they can leave the store with their newly purchased goods.
What Makes Crypto So Quick?
It’s clear that cryptocurrency can process transactions quickly, and that a number of industries have adopted it as a payment method in order to take advantage of its swiftness. But, what makes crypto so fast?
Blockchain Technology
Cryptocurrency operates using a technology called blockchain. Blockchain technology works like a spread-out, decentralised, ledger system. It does not report or rely on one central authority. Instead, numerous computers work to confirm transactions.
This is different from how traditional fiat currency operates. Traditional payment methods typically rely on central authorities like banks or financial institutions to authorise transactions. Sometimes, traditional payment methods must be authorised by more than one authority before they can be finalised. This all takes time, slowing down the transaction for the consumer.
Because blockchain is decentralised, transactions can take place quickly, without the need for a middleman. What this means is that transactions happen quickly and crypto holders are able to buy, sell, trade, or purchase goods using crypto easily, and transactions can take place almost instantaneously.
Consensus Mechanism
Another feature enhancing cryptocurrency’s speed is the consensus mechanism. The consensus mechanism is a protocol that supports blockchain tech in being able to independently verify and confirm records and transactions.
To understand the consensus mechanism, it’s important to understand nodes. Nodes can be simply defined as the computers that are working to confirm transactions on the blockchain. The consensus mechanism works by getting notes, or computers, to validate blockchain transactions in the correct order.
While there are a variety of different consensus mechanisms, the main two are Proof-of-Work (PoW) and Proof-of-Stake (PoS). Both typically process transactions faster than traditional payment methods, however, the PoS method is known to be the very fastest.
Smart Contracts
Smart contracts are another key feature behind cryptocurrency’s speed. Smart contracts are programmable contracts that are able to self-execute. They complete themselves according to certain pre-determined rules and terms. Because many cryptocurrencies use smart contracts, they are able to complete certain transactions with the assistance of smart contracts, rather than delaying transactions with human or manual interference.
When a crypto transaction is submitted that meets all of the pre-determined requirements, it can be automatically processed using smart contract technology. There is no need for the transaction to be manually processed or verified. As such, smart contracts speed up the processing time for crypto payments making them much faster than traditional payment methods, which often have to be authorised and approved by central authorities.
Availability
While traditional payment methods and financial transactions are typically limited to banking and trading hours, cryptocurrency is available around the clock.
For example, individuals who use traditional payment methods for transactions may find that their transfers are delayed once a bank is closed for the day, over weekends, and during holidays. If a transaction is processed on a Friday afternoon, a recipient may not see it arrive until Monday or Tuesday. This is a huge delay and often causes payees and recipients to feel frustrated.
On the other hand, cryptocurrency exchanges are always open and accessible. A crypto holder can send funds or pay for goods or services online via their wallet at any time. The accessibility and availability of cryptocurrencies are another major factor when considering why cryptocurrency payments are so fast.
—TechRound does not recommend or endorse any financial, investment or gambling practices. All articles are purely informational—
