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In the 1970s, SWIFT revolutionized global payments, but its speed hasn’t kept up. International transactions still take days. Now, SWIFT is making a major move into crypto. Partnering with Chainlink, they’re experimenting with transferring tokenized assets across multiple blockchains and financial institutions. Swift is gearing up for a crypto future, aiming to create a unified global market. This is significant, as it signals a shift towards mainstream adoption, with major institutions like BNY Mellon, Citi, and DTCC involved in the experiment.
SWIFT functions as the ‘universal adapter’ of the global banking system. (SWIFT stands for ‘Society for Worldwide Interbank Financial Telecommunication.’) It facilitates seamless payment transfers and communication between banks worldwide, transcending geographical and currency boundaries.
When making international wire transfers, you rely on an 8-digit BIC code, which essentially serves as their Swift ID (akin to a bank’s wallet address in crypto terms).
Importantly, SWIFT has no connection with blockchains due to its 1970s origins. This is where Chainlink steps in, marking the beginning of our investment opportunity.
Chainlink: Bridging the Gap Between Swift and Blockchain
Chainlink serves as a universal adapter for the blockchain ecosystem. It can seamlessly fetch data from diverse blockchains, standardize it, and securely facilitate data exchange between different chains.
In the context of the intricate world of blockchain technology, envision Chainlink as the equivalent of a universal translator for human languages.
In straightforward terms, Swift facilitates coordination among banks, while Chainlink orchestrates coordination among various blockchains.
Our investment thesis revolves around the idea that investing in a cryptocurrency’s underlying token is akin to investing in the core asset of the project. Hence, if the collaboration between SWIFT and Chainlink gains traction, LINK may emerge as a highly valuable investment opportunity.
If Chainlink operated as a conventional company, we’d affirm that it possesses a valuable service (offering blockchain oracle services), enjoys a sustainable competitive advantage (being the pioneering and dominant leader in its field), and boasts a capable management team, led by Sergey Nazarov.
Furthermore, with Chainlink’s foray into facilitating bank-crypto connections, it’s positioned to become a significant player within the global financial system.
Painting a Picture of the Future
The implications of this groundbreaking experiment are monumental, challenging the conventional notion of cryptocurrency’s future. It signifies:
Banks are poised to become custodians of your cryptocurrency, paralleling their role in safeguarding traditional cash.
Banks are preparing to employ established payment systems, such as SWIFT, for seamless crypto transfers between institutions and across diverse blockchains.
Oracle services like Chainlink are set to serve as crucial connectors, bridging the worlds of Traditional Finance (TradFi) and Decentralized Finance (DeFi), amplifying their intrinsic value.
As SWIFT aptly articulated in its report, “institutions prefer to leverage existing infrastructure and investments whenever possible. In essence, banks opt for reliability and familiarity. They know SWIFT, trust SWIFT, and use SWIFT, even if its speed leaves room for improvement.
If SWIFT can bridge the gap to the crypto realm, banks will undoubtedly embrace it. This seems to be the trajectory of things to come, and crypto investors, take note: Chainlink (LINK) is positioned to play a pivotal role.
In essence, SWIFT is on the cusp of a significant transformation, poised to become even ‘swifter’.
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