In February 2022, the Russian government ordered an invasion of Ukraine because they claim that Ukraine was violating aspects of an agreement between the two countries. Angry that Russia would invade a country unprovoked, an embargo against Russian banks was quickly passed, removing them from the SWIFT system.
But now, 6 months later, and Russia is actually doing better financially than they were before they were cut off from the world. In fact, they’ve used this time to create a blockchain alternative to the SWIFT program.
So what does this mean for Russia? And for other countries around the world?
What is SWIFT?
SWIFT is an acronym that stands for Society for Worldwide Interbank Financial Telecommunication and it is an organization that has been around since 1973 that establishes the standards used in financial transactions as well as supports a messaging system, so that money can be sent all around the globe.
Before SWIFT was created, moving money around the globe took time, and often hit many snags along the way. SWIFT did away with the roadblocks and streamlined the process, allowing over 200 countries to send money anywhere in the world.
Most banks in the world now use SWIFT, but they aren’t the only ones, as stock brokers and investment funds also use this program to open investment opportunities to those around the world.
Technically, SWIFT is a politically neutral organization, meaning it shouldn’t be affected when countries are in a disagreement or war with one another. But on March 1, 2022, SWIFT was called upon to disconnect Russia and Belarus from its systems, something which had only previously been done to Iranian banks. This was done in an effort to make it more difficult for the Russians to fund their war against Ukraine. They complied with the order.
Russia’s Blockchain Swift
Obviously, for all its claims to being neutral, SWIFT was not in both the case in Iran as well as the recent Russian conflict. And although people everywhere think that boycotting Russia is the way to go, this entire incident has only shown that governments are too powerful, and having a system like SWIFT only makes them more powerful.
Whenever you make something decentralized, you give the power back to the people it belongs to, i.e. the users of the system, and that’s exactly what Russian technology aims to do. Each user of this new blockchain banking system would have equal access to all other users, and no user could prevent anyone else from using the system.
Believe it or not, this isn’t the first system like this Russia has invented in the last few months. It’s actually the second. The first is named CELLS and was developed in June by Rostec. Don’t brush this announcement off so quickly either, because already a dozen of countries have signed up, and it’s only July.
The reality is, the boycott of Russia is doing little to stop the Ukraine invasion, and at this point it’s just a standoff until Putin wants to get involved in foreign stocks again or the USA needs Russian oil that badly. Even as you may want to support Russia by not purchasing it’s products, the world cannot ignore inventions like this blockchain version of SWIFT.
For those of you that know was game theory is, at some point if this SWIFT alternative gets bigger, the USA will have to join, otherwise they will miss out on a world of global financial transactions.
Posted Using LeoFinance Beta