According to Toshi Times, Jose Dakak, the principal investor of Argentinian bank Banco Masventas, has actually stated that the bank will leave from the international financial network SWIFT and begin using the Bitcoin blockchain network to settle international payments.
Can Bitcoin Replace SWIFT?
Through a strategic collaboration with Bitex, a cryptocurrency payment company based in South America, Dakak described that the bank will outsource the conversion procedure of bitcoin to fiat currencies to Bitex, which will then send out bitcoin to the recipient. Completion expense would be the bitcoin transaction charge that is sent out to the miners that confirm transactions on the blockchain and the fee charged by Bitex.
“The service allows you to reduce costs associated with international transfers as there are no international banks as intermediaries,” said Banco Masventas.
Dakak kept in mind that one of the initial actions the bank took to improve the implementation process of bitcoin was to cooperate with the Bitex development group to ensure recipients of bitcoin payments can flawlessly receive cryptocurrency transactions without borders. Dakak specified:
“One of the actions was to contract Bitex as a strategic partner in the implementation of the Bitex platform for payments and collections operations for our clients abroad.”
The SWIFT network, which is made use of by the world’s most significant banks and banks, is essentially a messaging network that makes it possible for banks to share information. Sending a payment from one bank to another needs a message to be sent on the SWIFT network, which has to be verified by hand.
Sending worldwide payments and remittance transactions on the SWIFT network can take at least 5 business days to three weeks, depending upon the size of the payment. Because the majority of global payments processed by banks are big, it often takes more than a week for the payment to be cleared.
Bitcoin is not the most versatile blockchain network and it does not have the most significant capacity. However, it is the most robust blockchain procedure with the longest track record, geared up with one of the most active open-source development groups in the market. Its openness and security permit the Bitcoin network to operate as a dependable financial network for global payments.
Additionally, most global payments sent out by banks, as specified above, are often large transactions that can not be processed by remittance outlets. Although bitcoin transaction costs could be a concern for $1 to $10 payments, for payments above $1,000, the bitcoin transaction cost is a non-issue.
Why is SWIFT Still Being Used?
The SWIFT network is not just run by leading banks by owned by the world’s biggest banks. As such, even though the SWIFT network is dated and makes use of an inferior innovation, banks have the obligation to utilize it. That is, until small banks like Bank Masventas pull out of the SWIFT network and begin to leverage public monetary networks like bitcoin, which are totally decentralized and peer-to-peer.
Other banks have actually begun to pilot blockchain protocols like Ripple and Ethereum to process global payments, which might be crucial in demonstrating the capacity of cryptocurrency as an alternative to the international finance sector in the long-lasting.