The Frameworks of Cross Border Cryptocurrency Transactions Between Two Countries

Abstract

Cross border payments have been the biggest challenges in overseas business transactions. It is characterized by frauds, lack of security, money laundering, transactions delays, and huge transactions cost. The aim of this paper is to introduce new model of cross border digital currency transactions that would use the cryptocurrency from two different countries. The model has adopted the blockchain technology to authorize the smart contracts and proof of works under the monitoring of central banks of participating countries. In this model each country would adopt its own digital currency equivalent to the fiat/cash money value. Unlike the traditional blockchain networks which is considered to be decentralized systems, this model has deployed centralized blockchain networks under the control of central banks. All nodes in the network will be owned by central banks that would records and trace any transactions by using blockchain technology. Apart from central banks, this model includes local banks, and digital forex exchange market as their main stakeholders to serve the customers. As a centralized system, any smart contracts and proof-of-works resulted from any desired transactions is validated by the central banks of participating countries before execution. The customers have been losing their money during transactions through decentralized privately owned digital currency exchange vendors due to the lack of enough network policy to counter any fraud or suspicious transactions. Also, the cross-border transactions are encountered by the excessive of fees such as, agent fees, oversees fees, transactions fees, and exchange fees. This system is usefully to secure and speedup the transactions, prevent any frauds, and to avoid the overseas financial organizations costs that has been incurred by the customers over the years. The governments around the world would have the total control of the monetary transactions if they deploy digital currency on their economy. However, they are required to tighten the security measures to prevent any security vulnerabilities, frauds, threats, and get rid of money laundering activities.