Banks from all over the world have agreed to partner up to form a global payments network that utilizes blockchains. Institutions like Bank of America, Santander, the Royal Bank of Canada, UniCredit, Standard Chartered, Westpac Banking Corporation, and CIBC have joined forces to develop the cross-borders grid, with financial service firm Ripple's distributed ledger technology serving as the foundation.
Presently, more than 11,000 financial firms in over 200 countries and territories communicate and transact through a network called the Society for Worldwide Interbank Financial Telecommunication (SWIFT). While SWIFT does seem to be working quite well, the global payments network in development promises sweeping improvements in both security and accessibility.
Ripple's new global head of strategic accounts Marcus Treacher told CoinDesk, "The messaging today across borders is Swift. The de facto way everyone moves money through countries is Swift. That’s what we think we can do better with Ripple."
The idea is to form an international, standardized network using blockchain. Unlike the prevalent central database system, a blockchain system is characterized by a distributed database that is continuously adding bits of information, or blocks, to itself. These blocks represent the changes made to the database, which are made all across the board. Aside from each block having a timestamp, all blocks also contain links to a previous reference block. This makes tampering with data very difficult, especially with the network verifying itself every few minutes.
Santander UK announced a similar development earlier this year, using Ripple's technology to develop an app that allows its employees to make cross-border payments. Each transaction makes a change in the ledger, and after a one-day settlement process, the transfer is finalized. Ripple hopes to reduce the reckoning process to almost real-time.
The Global Ledger
The invention and spread of the internet has opened the floodgates to information access. Users anywhere can summon facts and figures with a few well-placed clicks, but one thing does seem to be missing: veracity.
A worldwide ledger utilizing blockchain, an almost foolproof system for verifying information, could be what the internet has been missing all these years. Extending the idea of a real-time worldwide database into more applications promises to eliminate discrepancies and boost efficiency. Peer-to-peer transactions, political accountability systems, social media privacy encryption... The possibilities are endless.
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