SWIFT stands for the Society for Worldwide Interbank Financial Telecommunications – this is the name of an international banks union, a system for safe information exchange and transactions.
The system is operating since 1973. Back then, 248 banks from 19 countries united and started a cooperative society headquartered in Belgium. The need for such an establishment has been present for as long as people traded items across borders; so, as soon as the telegraph was replaced with new solutions that could manage huge data flows, this system was a deal.
Today, SWIFT has united over 200 countries and more than 11 thousand financial organisations. Every day the system processes over 30 mln messages.
The RESERVEUM Analytical Group is working to create an effective currency; today we will use SWIFT as another example of why fiat money is so imperfect.
So, how does SWIFT work?
The main goal of this system is to bring order to the information and money exchange that banks process on an everyday basis. The risks of international transactions lower significantly if all the participants “are on the same page” and follow the same rules. This is why the SWIFT founders came up with unified standards for interactions between foreign banks.
Every system user has a code. Every operation or message is also encrypted as a code. It fully eliminates any confusion or mistakes in international money operations.
Information exchange is processed via one special terminal that is present in every SWIFT bank. There, the encrypted messages go to an operation centre which processes them and sends them to the required system user.
Does anything bother you yet?
Don’t know about you, but to me, this whole system looks like an outlandish extension added to an old building. The whole building should have long since been demolished to give way to something new; however, despite all the inadequacies, the leaky roof is mended, walls are supported, etc. If you don’t get the comparison, of course, I mean the current money system and one of the pillars that still keep it erect – SWIFT.
The money system is incredibly outdated; if you need any proof, read our article called “FED – the Structure of the World’s Biggest Central Bank”.
If you think about it, SWIFT only exists because the money system is ineffective, inconvenient, bulky, horribly disorganised, and requires expensive and complicated maintenance. SWIFT is another intermediary that does not create anything and makes money only on the fact that the financial system is so poorly organised.
Still, SWIFT is a nice idea.
Here we do not want to criticise SWIFT as it is, but the ineffective money system that should have been replaced long ago. SWIFT is in fact a good example of the fact that it is not that hard to build a convenient financial system. It only requires a clear algorithm and a universally acknowledged money unit that is easy to manage and operate.
The cryptocurrency that our team is working on right now could become such money. It will be backed by a real resource, like energy or the economy’s total output which will give it real, not virtual value. And it will not be a centralised headquartered organisation managing this currency (regulating the emission and protecting it from inflation), but the blockchain technology, a smart contract.
Which means that all of the transactions of our stablecoin will be processed instantly and will still be well-regulated and transparent for all the tokenholders; the system maintenance will be free of charge or there will be a minor commission for the equipment and the support team.
Decentralisation makes such a system possible, and we believe it to be our mission to bring this notion to all the money system participants – to you! The money system revolution will only happen when every person understands that it is easier and more effective to use a decentralised currency than a conventional fiat currency. The main advantages are that you manage your own money, you do not depend on the Central Bank’s political decisions, you don’t pay commissions for your transactions to such systems as SWIFT, you don’t lose money because of the currency rate changes, you don’t pay for the inflation if the Central Bank prints extra billions.
Learn more about the protocol Reserveum.