Ripple may be about to turn the Society for Worldwide Interbank Financial Telecommunication (SWIFT) upside down.
Blockchain startup Ripple and it’s cryptocurrency XRP have been snagging high profile headlines for months now. After making waves in September when it briefly overtook Ethereum as the number two traded crypto as the price spiked up to $0.76, experts took notice, with many predicting that XRP may break the $1 mark by the end of 2018.
While that prediction hasn’t come to fruition just yet, there have been rumors of a different sort swirling lately. Some predict that Ripple may be poised to replace longstanding traditional financial tool, SWIFT.
What is Ripple?
Ripple and XRP are a bit different than other cryptocurrencies. Yes, XRP is a coin, but it isn’t mined like Bitcoin. Instead, it was issued by Ripple at its inception, who decided on a set amount of coins to create, in this case 100 billion.
Another thing that’s different about XRP is that it isn’t used to purchase good and services like other coins. Instead, financial institutions trade the currency between one another to transfer money quickly. Banks like Ripple’s system and XRP because their customers like it: XRP facilitates money transfers cheaply and in a matter of seconds or minutes. Before, international money transfers could take days to clear and were expensive.
That convenience has an increasing number of banks contracting Ripple for their services, raising speculation that XRP transfers are poised to overtake the current system, SWIFT,
What is SWIFT?
SWIFT is an acronym for Society for Worldwide Interbank Financial Telecommunication, a system used by banks to transfer money for nearly five decades now. Launched in 1973 with just over 200 participating banks, SWIFT now boasts more than 11,000 financial institutions using their system to exchange 15 million secure messages each day.
That number may be starting to shrink, however. According to Ripple CEO Brad Garlinghouse, Ripple now provides services for more than 100 banks that would otherwise be on the SWIFT network.
“The technologies that banks use today that Swift developed decades ago really hasn’t evolved or kept up with the market,” Garlinghouse recently told Bloomberg TV. “Swift said not that long ago they didn’t see blockchain as a solution to correspondent banking. We’ve got well over 100 of their customers saying they disagree.”
All of this comes among speculation among blockchain industry experts of a potential buy out of Ripple by SWIFT, ostensibly with the aim of slowing down Ripple’s growing progress.
The rise of Ripple and their increasing role as a player in the financial transfer services industry hasn’t escaped the notice of SWIFT. As early as 2015, SWIFT began looking into adopting blockchain technology for use on its network. Though the results were reportedly positive, SWIFT decided that it wasn’t the right time to make a major switch.
Whether or not that decision turns out to be fateful inflection point remains to be seen. In the meantime, Garlinghouse isn’t pulling any punches about Ripple and XRP’s ultimate goals.
“What we’re doing and executing on a day-by-day basis is, in fact, taking over Swift,” he said.