DLT will soon revolutionize the global payment system. This has huge implications for businesses and governments. The global payment system is the lifeblood of commerce. International funds transfers, be they corporate or consumer, have been difficult and a source of great frustration for customers. Money seems to hang in limbo between institutions for days.
Typically these transfers are based on messages sent through the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network. It is a member-owned global cooperative, the world’s leading provider of secure financial messaging services, and the most trusted network in the world. Most banks will not respond to an international funds transfer request unless it has gone through SWIFT.
Distributed ledger technology (DLT) will revolutionize these transfers concurrently speeding transfers and lowering costs. Firstly, DLT obviates the need for complex systems talking to each other to manage risk. Secondly, DLT will enable funds transfers between countries without any intermediaries, or delays. Thirdly, trust will be derived from mathematics, not from human organizations, to secure each transaction.
This highly profitable business will be disintermediated from the banks, and they know it. JP Morgan Chase chief executive Jamie Dimon has declared it a “fraud” and said he would fire any trader known to be trading the cryptocurrency. Multinational banks are afraid. I will explain why, and how the threat to their multibillion dollar business will materialize.