Face-to-face transactions are starting to seem quaintly archaic as many countries continue or even expand lockdowns due to the ongoing COVID-19 pandemic. Since the start of the crisis in early 2020, digital transactions have surged, particularly in e-commerce and digital banking. In contrast with face-to-face transactions, such as a direct payment of cash in exchange for a product or service, digital financial transactions typically require an intermediary, such as a credit card agency, payments processor or bank. This intermediary slows the process and, naturally, adds a cost to the transaction.
Distributed ledger technology is taking on a greater role in the handling of digital transactions. Decentralized finance applications that make use of DLT stand to disrupt and replace traditional financial intermediaries. Of course, transactions that occur on most DLT networks — and on blockchains, in particular — also require a fee for every transaction. While people may be accustomed to fees for digital payments, those fees are the elephant in the room when it comes to the full range of potential use cases on DLT networks.
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