SWIFT, Not So Fast


If you’ve ever tried to send an international wire transfer you know what a headache it can be.  You have to fill out multi-page forms at a participating bank, including the routing number, account number, SWIFT number, the recipient’s address and the receiving bank’s address and telephone number.  The fees are never quoted precisely because they are unknown until the transaction is completed.  The waiting period is never less than half a day and usually two.  The only way you know the wire went through is to wait an extra day for the bank to send you an email, if you request it, or call the recipient and ask.  Moreover, both banks have you sign forms that say they are not responsible if the wire does not go through even though they will do their best to keep the information guarded and secret.  The sense of insecurity you get from bank customer service reps, performing the service, does not exactly exude confidence.

A definition of the SWIFT banking system taken from the internet reads —

SWIFT stands for the Society for Worldwide Interbank Financial Telecommunications. It is a messaging network that financial institutions use to securely transmit information and instructions through a standardized system of codes.

Notice the definition says “a messaging network…to…transmit information.” The system doesn’t carry, or transmit any money, just the instructions to the receiving bank on what to do with the money when it arrives.  All of the hubbub is over trying to keep those instructions error-free and tamper-free.   In the end, the money is sent from one bank to another to another, if necessary, until it has reached the recipient’s bank by predesignated routes.  It’s an archaic system, to say the least.

Ripple is a cryptocurrency designed specifically to replace the SWIFT system.  The bank will convert your money to Ripple currency, send it instantaneously over the internet to the recipient’s bank who will convert it into local currency.  You are notified when the transaction is complete in a few minutes with minimal fees.

The big news today is that Moneygram, the money transfer service is launching a pilot program to test Ripple.  If adopted, Moneygram has an almost unbeatable product.  And, Ripple gets an incredible boost in the cryptocurrency space.


gif by Rollin Bishop, Popular Mechanics

Perhaps, calling someone averse to new technology a Luddite is too harsh a term.  Luddites were trying to stop the advance of technology by destroying labor-saving knitting machines in 19th century England.  Today, we’ve come to use the word to mean a laggard, someone slow to adopt new technology.  There are several friends I consider true Luddites. These are the folks that confess an aversion to technology, only it sounds more like a condemnation. “I can’t even set the clock on my VCR.”

These are the folks that would ask me which PC they should buy, ten years after everyone else already had a computer.  Then, when Apple announced they were coming out with new models in the spring, decide to wait. When I showed off my new Kindle, these same folk would say something like “Nah, I want to feel the texture of the paper in my hands.”  That meant to me electronic books hadn’t come to Main Street yet.  These conversations have helped me gauge where we might be on the new technology adoption curve as I have been wondering about with Bitcoin. When Bobby says “I’m in” I know the technology has hit its cruising altitude.

So it frightens me when one of these same folk (I’m not mentioning any names) calls to find out how to buy Bitcoin. It seems that there is a new vape product he wants to buy but the dealer only accepts Bitcoin. Wow. It hasn’t been thirty days since the Thanksgiving dinner discussion when we had argued over the Bitcoin bubble. Had he purchased Bitcoin then, he’d never have to think about how much pot cost, ever again.

Now, what to think? Are we finished?  Is the run over already? Has Bitcoin reached its fighting weight?  Is this what the future looks like?  Or, is the adoption curve of this new technology so steep that we are going to see explosive growth ahead that will make this past month’s action seem like the calm before the storm?

I’m beginning to think that that is what we are facing. Just in the last few days, I heard about Cryptokitties.io, the online kittens you buy with Ethereum, which are so popular the sales have slowed the Ethereum network to a crawl.  There’s the eSports network switching to Litecoin for its sports gambling.  There’s the CBOE and CME (Chicago Mercantile Exchange) which have been heralded for the past couple of months. Their futures markets will bring Wall Street to Bitcoin.

Each of these is guaranteed to contribute a great deal of new, increased traffic to the world of cryptocurrency. Add to those the coming Ripple ala SWIFT network where banks will sign up to use Ripple to expedite International Wire transfers, Cob coins which will introduce to us fee-free trading of cryptocurrencies, and Electroneum which will replace energy-wasteful mining with mining on smartphones.  The list is seemingly endless.  There are already thousands of new crypto-coins being programmed and introduced.  Some won’t make it.  Many will.  This is going to be huge.

171104 Cryptocurrencies

DQmSdSh23GzGePEJFHc69ADtZS7wXaMctKmTzGzEue1E3wXBitcoin represents between fifty- and sixty-percent of the two-hundred billion dollar market cap of all cryptocurrencies.  It is the first and remains the largest cryptocurrency, by far.  However, rivals to Bitcoin like Ethereum, Litecoin, and Ripple are quickly coming into their own.  If you’re thinking like an investor, any time you share a marketplace with competitors that can’t be good for business.  If you’re considering the altcoin situation like that, you’d be wrong.  Bitcoin benefits by the arrival of these additional tokens, as they benefit by Bitcoin’s acceptance.

The world is an enormous place. While Bitcoin is a good substitute for other currencies, money is not always the best trading medium.  When money is the best trading medium, conditions of the trade may be unfavorable to Bitcoin.  The trade might require vast sums, or high speed, or low bandwidth.  For those situations, other tokens might perform better than Bitcoin ($7486). New cryptocurrencies, facilitating all sorts of interactions, appear every day.  The underlying technology to Bitcoin, called blockchain, is the basis for all of these other altcoins.  It is blockchain that causes the paradigm shift.

Suddenly, strangers can be trusted.  A man comes up to you on the street and says, “That is a lovely hat you are wearing.  I must have it.  I will give you ten thousand dollars for that hat.”  You might run as fast as you can to get away from the dude.  Even though $10,000 is a handsome amount that you would gladly take, there is no way that the man could pay you in a way that could be trusted, even if he gave you what looked like real US dollar bills.  But what if the man said, “I will give you 1.33 Bitcoin (that’s $10,000 at today’s Bitcoin rate) for that hat.” You could take out your Bitcoin wallet on your iPhone and flash the barcode his way.  “Here’s my address,” you say in response, confident that you will either get paid or leave.  Since you cannot compromise a Bitcoin transaction, this stranger can be trusted to give you the Bitcoin or be gone.  That is the result of the blockchain distributed network.  You will know if you receive Bitcoin from that man that the Bitcoin is authentic, that he owns it, and he that cannot use it more than once.  Blockchain creates all sorts of trusted, distributed networks.  

There are altcoins for contracts, real estate, signatures, diplomas, and scientific research.  There is an altcoin to facilitate trademarks and copyrights.  All of these cryptocurrencies may be useful and do well.  All may service in a way Bitcoin is unable to perform.  Blockchain makes it possible.  In fact, the success of one improves the chances for success of the others.