In order to speed up the cryptocurrency payment cycle, NFC (Near Field Communication) is becoming more and more popular for conducting cryptocurrency payments at retailer terminals while buying items using smartphones and electronic gadgets. Let’s start by reviewing the fundamentals of NFC and blockchain.
NFC (Near Field Communication)
When two devices are touched or brought within a few millimeters of one another, near-field communication (NFC), a short-range wireless networking technology, employs magnetic field induction to permit communication between them. This covers credit card authentication, granting physical access, transmitting tiny files, and launching more powerful wireless networks.
Due to the fact that financial organizations maintain credit card holders’ information on servers that are easily hackable, millions of dollars in credit card payments made by consumers have been lost as a result. Blockchain technology is emerging as a substitute for cash payments that offers fraud protection. Public-key cryptography is used to secure cryptocurrency transactions. These transactions are carried out using immutable, traceable, and tamper-proof blockchain technology.
How Does NFC Benefit the Blockchain?
The Blockchain with Near Field Communication (NFC) technologies can be used to track things holistically. Blockchain-based anti-counterfeiting solutions now rely primarily on NFC. By storing each transaction’s private key on an encrypted NFC Tag, which is necessary to update the Blockchain, it can add an additional layer of security.
The shortcomings of either technology alone are balanced by combining blockchain and NFC into a single system: Blockchain interacts with the physical world using NFC, and blockchain validates NFC tags to find and stop tampering. Despite thorough investigation into each of these technologies separately, hybrid NFC-blockchain technology’s potential applications and constraints serve as inspiration for fresh invention.
NFC and Blockchain Work Together for Better Security
Engineers and designers can create a transparent flow of digital information with blockchain-based solutions. However, blockchain alone only functions in the digital realm; a middle step is required to link actual items to a blockchain and get the security advantages it may offer. NFC tags convert tangible items, places, and marks into the digital realm. Since NFC requires close physical proximity to function, the sensors’ relatively narrow range deters interference from a distance. NFC tags can, however, be copied, altered, and subject to various types of manipulation.
Ensures Fraud Prevention
In order to guarantee that payment will be delivered following the successful provision of the agreed-upon products and/or services, several financial institutions employ letters of credit. This is a common insurance strategy used in cross-border transactions; however it is susceptible to fraud including falsified paperwork for the shipment of subpar goods or failed delivery of items.
The adoption of a blockchain-based NFC-enabled application is being promoted by novel research as a way to combat letters of credit fraud. The letter of credit process is susceptible to fraud at any point, including the use of phony websites, letterheads, identification cards, personal info, account numbers, and other items. Blockchain and NFC do away with the ability of prior fraud cases to manipulate letters of credit and other relevant paper-based evidence.
Increasing Consumer Trust in Digital Payments
The fact that blockchain technology is used to process NFC payments and that all transactions are recorded in an unchangeable ledger is known to merchants. For businesses, using contactless NFC payments makes it simple to convert cryptocurrencies into fiat money like dollars, euros, sterling, etc. Without any additional transaction costs, the merchant receives immediate payment. With 147 million transactions in the first quarter of 2019, US-based peer-to-peer payment services provider Zelle transferred $39 billion via its network, a 72 percent increased.
Blockchain and NFC bring trust and security to real-time processes by distributing large-scale computing efforts and eliminating single points of failure Combined with the power of near-field communication (NFC) devices, systems using both NFC and blockchain promise unprecedented performance for a range of highly secured networks.