SWIFT joins hands with Consensys to power real-time blockchain-based cross-border payments
- SWIFT has announced plans to develop a blockchain-based ledger in collaboration with Consensys.
- The blockchain-based ledger will support real-time 24/7 cross-border payments while ensuring security and trust.
- The initiative will start with a Consensys-built prototype that validates transactions by enforcing rules through smart contracts.
SWIFT, the worldwide secure global messaging network used by financial institutions to transmit payment instructions, announced on Monday a strategic collaboration with the Ethereum (ETH) protocol software developer, Consensys, to develop a blockchain-based shared ledger that will power real-time, 24/7 cross-border payments.
SWIFT’s pivotal tilt toward blockchain technology
SWIFT announced on Monday that it has initiated the groundwork, involving over 30 financial institutions globally, with the assistance of Consensys, to design and build the ledger. This initiative is primarily focused on delivering real-time, 24/7 cross-border payments.
The blockchain-based ledger will expand SWIFT’s communication into a digital environment, ensuring that banks continue to access trusted and scalable transfers of tokenized value.
SWIFT clarified that its collaboration with Consensys focuses on infrastructure, leaving the decision on which tokenized value to transfer across digital ecosystems to financial institutions and their respective central banks. Still, SWIFTY will work closely with the banks to provide support and onboarding on the new infrastructure.
The blockchain-based ledger is expected to support a secure, real-time log of transactions between banks, with key elements such as recording, sequencing, and transaction validation enforced through smart contracts.
SWIFT’s new blockchain infrastructure will strive for interoperability with existing and emerging networks. At the same time, it will not deviate from the system’s core feature of maintaining trust, resilience and compliance for the critical functioning of global finance.
“Through this initial ledger concept we are paving the way for financial institutions to take the payments experience to the next level with SWIFT’s proven and trusted platform at the centre of the industry’s digital transformation,” SWIFT CEO Javier Pérez-Tasso stated during a conference in Frankfurt.
SWIFT has handpicked financial institutions from 16 countries worldwide to test and provide feedback on the design and capabilities of the blockchain ledger. Following the proof of concept, SWIFT will expand the test to more financial institutions ahead of wider implementation.
SWIFT has been criticized for slow transitions, with cross-border payments taking time due to the involvement of multiple intermediaries. The system faces other challenges, including high costs from correspondent banks, a lack of transparency, and sometimes inefficient account reconciliation.
The move to a blockchain-based ledger could mark a major pivot, offering faster, cheaper and more transparent cross-border payments by eliminating the need for intermediaries as processes are automated through smart contracts.
Bitcoin, altcoins, stablecoins FAQs
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
Author
John Isige
FXStreet
John Isige is a seasoned cryptocurrency journalist and markets analyst committed to delivering high-quality, actionable insights tailored to traders, investors, and crypto enthusiasts. He enjoys deep dives into emerging Web3 tren
