Business 25 May 2018Erik Gibbs
Argentinian bank snubs nose at SWIFT transfers, moves to crypto
On May 14, German banking institution Bitbond decided to move away from using the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system for international money transfers in favor of cryptocurrency. It is a move that simply makes sense. Cryptocurrency payments are much more reliable, much less expensive and much faster than they SWIFT-enabled payment. Now, another bank has realized this, as well.
Argentina’s Banco Masventas (BM) has announced that it will be putting SWIFT on the shelf in the basement storeroom in favor of using cryptocurrencies like Bitcoin Core (BTC).
The bank is teaming up with Bitex, a cryptocurrency exchange located in South America. Bitex was chosen after lengthy research, focus groups and tests to handle all of BM’s international payments. The exchange will manage the currency conversion, swapping between BTC and fiat, and send the required payments to the intended recipients. The program will offer lower transaction fees, only charging for the Bitex operations and the mining fees.
SWIFT’s system is simple, but costly. A bank, or other financial institution, sends a message to SWIFT that contains the details of the money transfer and SWIFT then forwards the details to the appropriate destination Each transmitted message is manually verified.
In a statement, BM said, “The service allows you to reduce costs associated with international transfers as there are no international banks as intermediaries.”
BM’s principal shareholder, Jose Dakak, explained that the bank ran a battery of tests prior to deciding to launch the program in order to ensure that it would work as anticipated. To guarantee that it would be able to offer the cryptocurrency solution adequately, it decided to enlist the assistance of Bitex. Dakak said, “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.”
SWIFT has been around since the invention of the first mobile phone in 1973, and hasn’t changed much since. However, the network is slow and clunky and transactions can take anywhere from five days up to three weeks—just being processed by SWIFT. Even after the transfer is received by the destination bank, that bank can sometimes take as much as a week to process the transaction. SWIFT fees can reach upwards of $100, while cryptocurrency transaction fees are typically less than $10. Additionally, a cryptocurrency exchange can occur in a matter of minutes (sometimes an hour or two, but still much faster than with SWIFT) and don’t require a middleman.
It’s worth noting that the BTC network, at one point, saw its transaction fees going from what was once $0.20 to as high as $20, prompting companies like Steam to ditch the platform. Recently, OpenBazaar co-founder Washington Sanchez lashed out at the high fees involved in BTC transactions, noting that the issue to embrace alternative cryptocurrencies had now been forced by the fundamental problems with BTC for payments.
OpenBazaar is looking at increasingly incorporating Bitcoin Cash (BCH) for more efficient, cost-effective transactions. Without the legacy issues that affect BTC, Sanchez said OpenBazaar would be implementing support for BCH, along with several other cryptocurrencies by the end of the year.
As cryptocurrency continues to grow in popularity, it’s a safe bet that other banks and financial institutions will open their eyes to the value of integrating the technology into their payment operations Consumer demand will also force the issue, as has already been seen with the expansion of cryptocurrency investment products by companies once vehemently against the currency of tomorrow.
Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.
Bitcoin Satoshi Vision (BSV) is today the only Bitcoin project that follows the original Satoshi Nakamoto whitepaper, and that follows the original Satoshi protocol and design. BSV is the only public blockchain that maintains the original vision for Bitcoin and will massively scale to become the world’s new money and enterprise blockchain.
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