Ripple chief cryptographer David Schwartz claims that banks will not use blockchain for cross-border payments in the near future.
Ripple’s chief cryptographer David Schwartz claims that banks are unlikely to implement blockchain to process international payments, citing low scalability and privacy issues, Reuters reports June 13.
In an interview with Reuters, Schwartz argued that even though banks recognize the potential of blockchain technology to reduce transaction times and costs, the technology is not yet scalable and not private enough to be implemented by banks on a global scale.
Ripple claims that xCurrent’s immutable “interledger” protocol offers instant settlement, making it superior to existing payment networks. However, xCurrent “is not a distributed ledger,” according to Schwartz. In the case of xCurrent, network peers do not have access to a shared ledger, which is the basis of major blockchain networks such as Ethereum (ETH) or Hyperledger. Schwartz said:
“What we hear from many of our clients is that it is imperative to keep their transactions private, process thousands every second, and accommodate every type of currency and asset imaginable.”
Marcus Treacher, Ripple’s senior vice president of customer success, said the firm had launched a project to offer banks “classic” blockchain-powered payments. However, banks rejected the initiative, citing that one cannot simply put “the whole world on a blockchain.””
According to Reuters, several banks have tested and incorporated Ripple’s xCurrent technology for cross-border payments that can “eventually connect” them to distributed ledgers.
In May, financial institutions participating in a pilot of Ripple’s xRapid platform reported transaction savings of between 40-79 percent, while noting a significant improvement in transaction time, from an average of 2-3 days to “just over two minutes.”
In April, Spain-based Banco internacional Santander confirmed the launch of its blockchain payment network powered by Ripple One Pay FX, reportedly becoming the first bank to do so.