The Society for Worldwide Interbank Financial Telecommunications (SWIFT) the world's most widely used interbank system has dashed cryptocurrency in a recent briefing.
According to FXstreet, SWIFT doesn't recognize cryptocurrencies or blockchain as posing any threat to the financial industry. Instead, SWIFT representatives called out cryptocurrencies such as bitcoin for its volatility:
They go down in value like a yoyo, they’re useless and unstable. And even if crypto companies do make is stable, it’s still a basket of currencies.
SWIFT didn't thwart all cryptocurrency initiatives; representatives noted that Facebook's incipient venture into the crypto industry holds some merit, and could potentially disrupt remittances in the short term.
Not So Swift
SWIFT is used throughout many of the world's banks, with 11,000 financial institutions running on their messaging system.
Nevertheless, there's a reason why SWIFT and other interbank communications are known as legacy systems. These outdated methods for sending information about finance are time-consuming and costly. SWIFT Representatives openly admitted to these inefficiencies:
If you want to send a payment [via SWIFT] from Australia to China after midday, you instantly have a 12-hour delay because of opening hours.
Incredibly, despite not being completely ignorant of their own shortcomings, SWIFT still doesn't see the benefits afforded by cryptocurrencies and blockchain.
By comparison, most cryptocurrency transactions are almost instantaneous, not to mention, near enough feeless. In fact, due to the innovation provided by the blockchain, many cryptocurrency companies are primed toward the disruption of legacy systems such as SWIFT.
Firms such as Ripple and its rival in the space, Stellar, are two such projects aiming to transform the remittances industry; and for the most part, they're gradually succeeding. This year, Stellar, via an accord with tech giant IBM, created Worldwire, a payment network that runs on the Stellar blockchain; allowing for the inexpensive global transfer of funds between regulated institutions.
Meanwhile, Ripple continues to sign banks up to its various cross-border payment solutions. Notably last month, Ripple nabbed banking giant PNC, who became the first bank in the US to use Ripple's payments network.
.@PNCBank has joined the 100+ financial institutions on RippleNet. It’s one of the first major U.S. banks to use #blockchain tech to streamline payments into and out of the country. https://t.co/nckQaup9vZ— Ripple (@Ripple) September 19, 2018
Moreover, while not the fastest cryptocurrency around, bitcoin still stands as a significantly cheaper way to send funds than traditional methods; even when it's at a premium.
This week a $1 billion transfer was caught making its way through the crypto ecosystem. While this gargantuan figure was noteworthy enough, the fact that it cost a mere $700 to send grabbed much attention. As reported, this fee still stands as a premium, despite the fact that traditional methods would have cost a magnitude more.
Featured image credit: photo via Pixabay.com.