Convergence: Payments + Speed + Scale

This is the first post (of a few posts we’ll publish) where we discuss convergence, and how we see converging technologies unlocking convenience, value, security, and innovations, just like what’s happened in the past and on a similarly large scale.

For starters, what does convergence mean? A quick search turns up a few explanations, all along the same theme:

“Convergence is a key driver of innovation and progress.” - Forbes

“Technological convergence is the tendency for technologies that were originally unrelated to become more closely integrated and even unified as they develop and advance.” - Wikipedia

“At its simplest, technology convergence is the act of bringing two or more disparate technologies together into one single product or service” - LinkedIn post

In this first post, we’re going to look at the convergence of payments + speed + scalability, and see how that might disrupt existing systems and industries, and how we believe we’ll play a part.

The day is coming for fast digital payments, at scale. Soon we’ll be processing a vast number of digital payments and transfers of value almost instantly. When that day arrives the conditions will exist to unlock unimagined opportunities and unleash capital looking to fund those opportunities.

Sounds great, but what does this all look like today?

How long does it take to send money today? 

SWIFT transfers can take between 1-5 business days to complete. Factors affecting the duration include:

• Destination country
• Time zone differences
• Banking efficiency
• Weekends and holidays
• Security checks

That’s not terribly swift, is it?

Wire Transfers (Domestic) are usually completed within one business day. However, some banks may process transfers within a few hours and cut-off times and banking hours can affect processing speed. 

International Wire Transfers generally take between 1-5 business days but may take longer for "slow-to-pay" countries (up to three weeks in some cases).

Stock Settlements - stocks, bonds, municipal securities, exchange-traded funds take Day of Trade + 1 day.

The Power of Convergence in Tech

When the right set of technologies converge, new business models and use cases will emerge. Decentralized Finance, including cryptocurrency trading, tokenizing of tangible and intangible assets, and DePIN (Decentralized Physical Infrastructure) are being developed and have the to potential to power a new financial system that is faster, more efficient, and cheaper than our current finance and trading systems. 

To bring this convergence opportunity into focus, in a way that nearly everyone can relate to, let’s look at some  technological convergence events of the recent past, and what such events have produced.

Let’s look at Uber, and what technologies converged to bring its disruptive convenience into the hands of so many users. Uber was made possible with the convergence of mobile phones, realtime geolocation, and cloud-based networks where the buyer (passenger) and seller (the owner/driver) can engage in a for-hire car system.

Here’s another: Mindset Medical uses smartphone sensors to capture vital signs and physiological measurements for remote healthcare. The convergence of AI, VR/AR, and medical technology makes this remote diagnostic service possible.

Let’s take a look at the converging tech of Uber in more detail.

What technologies converged to make Uber’s new business model possible?

1. Smartphones and GPS: The widespread adoption of smartphones with built-in GPS capabilities allowed for real-time location tracking of both riders and drivers. GPS and mobile internet access also enabled advanced digital mapping and routing systems to optimize driver routes and enhance the overall user experience. It should be stressed, widespread adoption was requisite to create the value that network effects provide. 
2. Mobile internet: High-speed mobile internet connectivity enabled the seamless exchange of data between users, drivers, and Uber's servers.
3. Cloud computing: Uber's platform relies on cloud infrastructure to handle vast amounts of data processing and storage.

Additionally, advanced software and machine learning enabled driver-rider matching, route optimization, and dynamic, in-app, cashless pricing.

How do we realize a new world of payments?

Industry, government and other stakeholders must craft safe, equitable and compliant standards and regulations. We need systems that guarantee a level playing field for all participants.

Design trust in. An effective way to enable trust is to put it front and center, starting at the design stage. Embed oversight capabilities into your organization, create or enhance controls for digital assets, upskill risk professionals, and be ready to comply with regulatory, legal and tax requirements. 

Source: Tokenization in financial services: Delivering value and transformation (PwC)

Payment + Scale + Speed +...

For this new decentralized payment system to replace the existing system it must:

1. Process the same volume of transactions, or more, than the existing financial system 
2. It must do so as quickly or faster. 
3. It must have the ability to be compliant with the various regulatory environments around the globe.
4. The cost per transaction must be as low or lower than what we have today.

When the above elements converge, the industry will shift to this better model.

Many countries are already beginning to create regulatory frameworks to adopt Web3 technology for payments and other forms of tokenized value transfer. This will hasten the adoption of tokenized stocks, bonds, cash, cryptocurrency, data sets or loyalty points -  any asset that can be stored and managed on a blockchain.

There are blockchain companies working on both the technological and regulatory requirements. With IronWeave, we believe we have a comprehensive platform that will meet the technical challenges as well as conform with the coming regulatory environment. It’s a unique collection of in-demand technologies – 

• Scale: Horizontal scalability in the IronWeave fabric. 
• Speed: Finality in IronWeave for payments can be achieved in milliseconds, not days. 
• Payments: Built into the core architecture is private, secure, compliant payments, along with data that’s equally secure.

Just the beginning…

In addition to payments, or transactions on blockchains, there is a push to put other assets on a secure and immutable blockchain, but most fall far short. If your assets are on a chain that everyone can scan, the breaches are nearly guaranteed to occur.

Even so, the movement to tokenize assets is underway and this movement represents a sea change in how we conduct the business of transferring value. Tokenization lets you digitally represent asset ownership for any tangible or intangible asset, be it stocks, bonds, cash or cryptocurrency, data sets or loyalty points — all on a blockchain. Once your asset is represented by a token, you can quickly and cost-effectively transfer, manage, trade it, use it as collateral and more.

But the world won’t jump in until such tokenization can be proven to be secure - more secure than today’s centralized databases, which are so often hacked and compromised. It will need to be  private - any corporations want to put all their assets on a public and scannable blockchain? Anyone? And it must be scalable - no big business will put their assets onto a chain that restricts  them from accessing their assets or at least puts them in a line so long that you either pay more to get them out, or wait a long time. 

But solve those – a platform that’s secure, private, scalable, and exceptionally fast – and you have a convergence that can unlock a massive wave of capital that’s ready to converge and affect this sea change. 

IronWeave’s blockchain fabric creates secure, private shared blocks among multiple chains within the IronWeave fabric. It’s a solution that scales and will be ready to be the underlying infrastructure in the coming and expanding Web3 economy, as such convergence of scale, speed, and payments becomes a secure, private part of our lives.