On the SWIFT and R3 Blockchain Team-Up: What’s the Deal?
International payments powerhouse SWIFT has announced it will be linking R3’s Corda blockchain to its Global Payments Innovation (GPI) framework. The meld will allow Corda users to quickly settle cross-border payments via SWIFT’s new GPI Link portal.
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R3 Blockchain Corda to Be Usable in SWIFT GPI Via Newly Developed Link
The SWIFT financial network is how most banks in the world today conduct cross-border payments. And now, thanks to a new proof of concept they’ve developed called GPI Link, R3’s institutional blockchain users will be able to settle payments via SWIFT’s near real-time GPI payments system.
— R3 (@inside_r3) January 30, 2019
SWIFT’s GPI framework — which the interbank consortium has billed as the “new standard in cross-border payments” — first launched in 2017 as a means to drastically speed up domestic and international bank transactions in the SWIFT network.
The payments titan’s new GPI Link proof of concept will allow corporations and enterprises in R3’s own blockchain consortium to leverage SWIFT payments.
“The first stage of the PoC will work on R3’s leading blockchain platform, Corda, and aims to bring the benefits of gpi payments’ speed, ubiquity and certainty to distributed ledger technology (DLT)-enabled trade,” SWIFT said.
“The PoC addresses the need for DLT-based commerce to be supported by global, fast, secure and transparent settlement using fiat currencies by enabling ‘off-ledger’ payment settlement based on gpi.”
R3, which presently has more than 200 members comprised of major banks like BBVA and Credit Suisse, is a distributed ledger company whose open-source Corda platform began being charted out in 2014.
But R3 and Corda are just the start for SWIFT, though, as the company noted that GPI Link eventually “will be extended to support other DLT, non-DLT and e-commerce trade platforms.”
Blockchain In, Cryptocurrency ‘Overhyped’?
The R3 team-up suggests a “Big Tent” approach is coming to SWIFT in the years and months ahead as it pertains to plugging blockchain platforms into the traditional structures of global finance.
But SWIFT CEO Gottfried Leibbrandt, who is stepping down from that position in June 2019, answered in the affirmative at this year’s Davos conference when asked whether cryptocurrencies, which are powered by blockchain tech, were “overhyped and quite dangerous.”
Discussion at DAVOS about crypto. At around 26:00 the moderator is asking questions to the listeners. The last question was "how many of you think crypto is over hyped anddangerous". There is only one man raising his hand, and it was the SWIFT CEO. LMAO.https://t.co/K1dxAffI0V
— Hlnoooo (@hlnoooo) January 23, 2019
Of course, such a position is hardly a permanent characterization of SWIFT’s own vision for its future, but Leibbrandt’s affirmative sentiment does seemingly typify how many players in traditional finance have felt on the matter to date: crypto bad, blockchain good.
The grand question for now is whether cryptocurrencies will be able to beat out SWIFT as superior payments platforms in the decades to come, though the consortium has kept its options open and emboldened its own position through the development of its GPU Link.
What’s It Mean for Ripple, R3’s Payments Rival
Speaking of competition, Ripple is a competitor to both R3 and SWIFT. In fact, R3 and Ripple sued one another in late 2017 over a fractured business deal.
These dynamics provided added layers of intrigue when SWIFT’s Leibbrandt discussed the R3 team-up on a Jan. 30th CNBC panel, as Ripple CEO Brad Garlinghouse was sitting on the same panel at the time.
While some have called the partnership deflating for Ripple, Garlinghouse was diplomatic during the talk and commented on what he saw as the advantages of cryptocurrency over SWIFT going forward.
“SWIFT today is a one-way messaging framework, it isn’t a liquidity provider,” Garlinghouse said.
“When we think about an internet of value, it’s a mixture of two-way messaging frameworks, moving to a real-time chatting protocol if you will, coupled with real-time liquidity.”
XRP traders also seemingly took the news in stride, as Ripple’s cryptocurrency acutely and curiously surged on SWIFT’s R3 news.
swift using R3 tech?
I guess that means… pump ripple?
I'm confused and scared pic.twitter.com/SDHUtPNxQv
— loomd'rat (@loomdart) January 30, 2019
Why that happened is anyone’s guess for now. For instance, some traders may have viewed the R3 news as positive for Ripple in kind, as R3 added XRP support to Corda in Dec. 2018.
What’s your take? Beyond being an advancement for R3, is the SWIFT news a boon for the blockchain ecosystem in general? Let us know in the comments section below.
Images via Pixabay