How Banks Can "10x the Blockchain Industry"

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Master Trader
Apr 17, 2013
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Recently, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) announced a partnership with Chainlink (LINK) to experiment with connecting private and public blockchains.

Swift is the traditional global financial messaging system that underpins most international money and securities transfers. After several tests with private blockchains, Swift is expanding its experiments to include public blockchains, with plans to use Chainlink’s Cross-Chain Interoperability Protocol (CCIP).

The collaboration includes major financial institutions like BNP Paribas, BNY Mellon, Citi, Euroclear, SIX Digital Exchange (SDX), and the Depository Trust & Clearing Corporation (DTCC). Chainlink is providing what Swift calls an “enterprise account abstraction layer.”

“What’s missing is the ability to send [assets] from a bank chain to a public chain — banks want to do that,” said Sergey Nazarov, co-founder of Chainlink.

The proof of concept will demonstrate how banks can practically interoperate across these networks, both public and private.

CCIP is a “universal messaging interface” for cross-blockchain communications. It has the ability to interface with private blockchains and includes security features like active risk management networks. These features differentiate it from alternatives like Axelar’s general message passing and make it appealing to major financial players.

Swift aims to use existing bank systems and sees a multichain future. However, connecting to hundreds of different chains is not feasible for most banks. Chainlink aims to save thousands of global banks time and money by linking chains through one integration.

“I think they realize the digital asset class is not going anywhere,” Nazarov said.

Investor takeaway: This collaboration certainly has the potential to greatly increase the adoption of blockchain technology in the traditional financial sector. Chainlink would be an obvious beneficiary, but demand for other blockchain-related products and services is likely to follow.

That said, many regulatory hurdles exist (assuming the technology works). In other words, this is all very early, but it bears watching, particularly for LINK investors (or those considering investing in LINK).

“But, despite inherent risks, a well-executed investment strategy, with due diligence, patience, and consistent monitoring, can yield stable high returns and significant upside.”
 
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