SWIFT - the CENTRALIZED payment rail used by global banks

Russia is amassing troops on its border with Ukraine. There is fear that Russia might invade Ukraine. Some countries want to find a way to dissuade Russia from potentially invading Ukraine.

One way to dissuade Russia from potentially invading Ukraine is via financial means.  The plan is to "kick" Russia out of the SWIFT. What is SWIFT? SWIFT is a payment network that connects global financial institutions, such as banks across the globe. Meaning if Russia is not on the SWIFT global payment network, money outside of Russia cannot flow into Russia.

SWIFT is an example of a CENTRALIZED network. Meaning that SWIFT the entity control how money flows around the globe. It is governed by a board of 25 members, mostly from the prosperous nations and populous nations. Depending on your point of view, centralized is either good or bad. In this case for Russia, this is bad. This situation calls for the need of a DECENTRALIZED network - where no board members can assert influence on its network members.  This is where blockchain enters.  BLOCKCHAIN can provide the technology for this. The consensus mechanism in a blockchain determine how the network is used. The consensus algorithm is predetermined up front, where machines vote - instead of humans or nations.

 

 

The answer to a centralized network is to create alternatives to it. Russia created "SPFS", an alternative messaging and payment system to SWIFT. Currently SPFS supports payment transference WITHIN Russia.  China also created its own version of SWIFT called "Cross-border Interbank Payment System"  CIPS. All this to hopefully replace SWIFT so that payment can flow into Russia and China respectively. The value of a network is who is on it. If Russia has its own SPFS, and China has its own CIPS, one might argue that they should have joined together and created a true alternative to SWIFT. Maybe "DSNM" Decentralized SWIFT with No Meddling.

Interestingly, cryptocurrency such as Bitcoin, can be an alternative payment method, instead of using SWIFT. Maybe Ripple XRP?