A fascinating perspective comes from none other than the banking messaging behemoth SWIFT, through their latest release, “Connecting blockchains: Overcoming fragmentation in tokenized assets.” They argue that a short-term solution to financial issues lies not in merging Central Bank Digital Currencies (CBDC) and multiple assets into one ledger but rather making diverse networks interoperable through blockchain technology.
Seeing the future of finance firmly rooted in blockchain adoption, SWIFT unearths its methodology to address the existing system’s woes around interoperability. Users currently stand in the face of insecure interoperability, which, by default, elevates the risk of unsuspectingly losing their assets to miscreants — hence a disappointing user experience.
In a promising move, SWIFT has announced its plan to use Chainlink’s Cross-Chain Interoperability Protocol (CCIP) launched in July. This move is a masterstroke aimed at connecting multiple networks leading to a unique financial system for users. Traditional institutions would find it appealing as the interlinking feature with Chainlink attempts to tone down their overheads as they try to harness tokenization.
Underlying the theme of their piece is the importance of interoperability, especially in an era when a newly-digital financial system is dealing with mushrooming blockchains and tokenization that hold the potential to cause fragmentation.
Recent diachronic studies on the best potential method to leverage a multi-currency, CBDC-based, cross-border payment system reflect an undercurrent of change in this space. And, it sounds a promising note for those keenly interested in tokenization.
97% of institutional investors, the ultimate litmus test, are confident that tokenization—though at a nascent stage—can drive radical shifts in this sector. This will not just benefit the market by offering more utility but will also make investments more inclusive and affordable. The one requirement? Interoperability.
Fulfilling this requirement, SWIFT has chosen Chainlink as an abstraction layer to bridge its network with Ethereum’s Sepolia network. The CCIP has been the catalyst for interoperability between the source and destination networks.
Financial stalwarts like Alain Pochet, head of Client Delivery at BNP Paribas, who partnered with SWIFT for this study, are enthusiastic about the project. According to Pochet, connecting traditional technical platforms and ensuring interoperability between blockchains is a mammoth task that needs tackling. That’s where SWIFT’s experiment shows potential, leveraging the massive and established network connectivity, marking an impressive stride towards pervasive digitalization, and overcoming challenges of blockchain fragmentation.
Source: Cryptonews
