Ripple has continued in its mission to pioneer the internet of value in which money moves as swiftly as information does. This noble mission is helping millions of people across the world through their banks to access funds in seconds and at a very low cost. This has made Ripple a favorite among many which saw its XRP token rise over 30,000% in 2017.
In fulfilling its mission and helping banks achieve speed, convenience and cost efficiency, Ripple has also been working against established channels, institutions and methodologies. Chief among this is the SWIFT network. SWIFT, an acronym for Society for Worldwide Interbank Financial Telecommunication is a network that enables financial institutions all over the world to share information about financial transactions in a secure way.
SWIFT was formed in 1973 with 239 founding members which were from 15 different countries. Over the years it has controlled most of the international money transfers. Its strategic control of international money transfer has given it a very strong hold on international trade. This has led major governments like the US and regional organizations like the EU to invest heavily to have a voice in the running of SWIFT.
With most of the banking sector which is being targeted by Ripple being a major stakeholder in SWIFT, therein arises the first dilemma for Ripple. While the banks are excited about RippleNet as many of them have admitted, concerns are still rife about what this means to the future of SWIFT.
SWIFT’s hold on international money transfers makes it not just a money remittance network, but also a tool for exerting authority and control over regions. In 2012, SWIFT was put under immense pressure from advocacy groups and governments alike including the US government to sanction the transfer of funds to Iran through SWIFT. While initially it rejected the idea, it later succumbed and disconnected many Iranian banks from its network.
This sanction had catastrophic effects on the economy of Iran. It denied the Middle Eastern country billions of dollars that it gets from international trade. The disconnected banks were said to be in breach of EU policies with SWIFT threatening to disconnect even more banks. The banks were reconnected to the network four years later in 2016 but a lot of economic damage had been done already.
Such strategic use of the SWIFT network threatens the adoption and full use of RippleNet. Unlike SWIFT which is controlled through its headquarters in Brussels, Belgium, RippleNet relies on nodes which are distributed with Ripple announcing that it would ensure that a majority of the nodes are not under its control in its latest structural improvement. As more banks adopt RippleNet and begin to rely on the blockchain for international transfers more, countries like Iran which have suffered the effects of bans and sanctions for decades will be able to break free from these shackles.