In the world of finance, blockchains are often compared to SWIFT. Today, we're going on an in-depth comparison to reveal the real state of affairs. Our focus? The key factors are ease of use, speed, and throughput. Let's dive in and analyze SWIFT alongside top blockchains to determine if crypto is truly challenging the status quo or if the tables are turning.
Ease of use and speed
Firstly, what exactly is SWIFT? SWIFT, short for The Society for Worldwide Interbank Financial Telecommunication, serves as the primary messaging network for international payments. Established half a century ago in 1973, SWIFT remains the default standard for international money transfers. Here's how it works: SWIFT, the organization, extends its network by adding banks and assigning International Bank Account Numbers (IBANs) to bank users. For example, if John in Canada intends to send $1000 to Bob in Germany, he must acquire Bob's IBAN, the SWIFT code of Bob's bank, Bob's legal name, and details of any intermediary banks (sometimes there are several).
Example of IBAN: AL472121100900000002356987411 (Notice its similarity to a crypto address, though far from memorizable).
John must then be ok with SWIFT fees and potential currency conversion. What makes it interesting is that neither the fee nor the conversion rate is known at the time of initiating the SWIFT transfer. They depend on intermediary banks and current currency exchange rates when the transfer is executed. In most cases, SWIFT fees range from $15 to $50. Subsequently, after John initiates the transfer, he finds himself waiting for 1-5 days for the funds to reach Bob, provided no Anti-Money Laundering (AML) or security checks are triggered. If such checks are activated, the transfer might extend further, demanding additional documentation from John to validate the source of funds and the purpose of the transfer. As you can see, this entire process gives some vintage charm, akin to a trip back to 1973.
Instead of delving into the details of each blockchain, let's focus on the broader picture. Typically, when John in Canada wants to send $1000 to Bob in Germany via blockchain, they need to agree on the currency and network. John can then send money to Bob's address. The time it takes to initiate and finalize a transaction varies by blockchain, ranging from 15 seconds to 1 hour, with costs typically spanning from 20 cents to $10-15. It's important to note that once a blockchain transaction is finalized, it's irreversible (except for extremely rare cases of hard forks).
According to the latest data from Statista, the SWIFT system handles an average of 45.2 million transactions per day. This translates to approximately 523.14 transactions per second.
The top 10 most popular blockchains, including Bitcoin, Ethereum, Polygon, Polkadot, Solana, BNB Chain, Arbitrum, Optimism, Algorand, and Avalanche, collectively process approximately 360.47 transactions per second, according to chainspect.app.
In terms of ease of use and speed, blockchains hold a significant advantage over SWIFT. While SWIFT still dominates in terms of transactions per second, it's essential to remember that our analysis covered only 10 blockchains out of hundreds. Moreover, blockchains have been in existence for just over a decade, while SWIFT reigned as the sole international money transfer method for over 50 years.
Given these factors, we can cautiously believe in a promising future for the blockchain space. The journey has only just begun.