The Society for Worldwide Interbank Financial Telecommunication more commonly known as SWIFT is partnering with Chainlink to create a cross-chain interoperability protocol (CCIP) in an initial proof-of-concept. SWIFT provides inter-bank messaging which is the backbone of the world’s financial system. Chainlink on the other hand is a decentralized oracle network that provides real-world data to smart contracts on the blockchain. In simpler terms, Chainlink provides a bridge between crypto and non-crypto transactions.
Why is it important?
SWIFT is a pillar of the worldwide financial system and its willingness to dip its toes into blockchain technology is positive news in the crypto world. If CCIP comes to fruition, this will theoretically let SWIFT’s system to interact with cryptocurrency blockchains. Simply put, it will make it possible for traditional financial institutions like banks to facilitate crypto transactions. This in turn will accelerate crypto adoption.
Possible future outcomes.
The CCIP concept is good on paper, but there are talks that SWIFT is on its way out. MasterCard’s CEO Michael Miebach said that he does not expect SWIFT to exist in 5 years. He was speaking at a panel session on central bank digital currencies (CBDCs) as part of the Global Blockchain Business Council’s (GBBC) Blockchain Central Davos conference,
For all the conveniences it provides SWIFT is slow compared to blockchain transactions. SWIFT payments can take 1 to 5 working days to complete.[i] The partnership with Chainlink does not seem to tackle this issue. If and when it decides to remodel itself then blockchain technology is a feasible format.
How will it affect the LINK token?
Guy from Coin Bureau gave his analysis on LINK’s possible price action. According to him, it will probably not increase the demand for the token, since LINK is used to pay Chainlink Oracle providers and they in turn will sell these tokens for fiat. Its price has been lackluster despite the news. He further noted that it is still possible for a speculative pump.
This project is something to look forward to. Its success will expose a big sector of traditional finance to the crypto space. This in turn will pave the way to mass global adoption.
[i] (https://www.fin.do/blog/62_swift-transfers-explained)
