XRP can replace SWIFT as payment system

  • Chris Larsen, co-founder of Ripple, said that XRP can replace SWIFT as a cross-border payment system.
  • In his opinion, the lack of clarity regarding regulators and the legal framework is hampering the development of the crypto industry.

Ripple co-founder Chris Larsen gave an interview for the Block Stars podcast after his recovery from the COVID-19 virus. Larsen expressed his views on Bitcoin and the development of the crypto market. He also talked about what blockchain technology and the crypto movement mean for the progress of the global financial system. Larsen said that for the technology behind cryptocurrencies needs to be more adoption, scalability, evolution and integration with the existing financial system to impact the global financial system:

That’s where the industry is, and that’s fantastic. We just have to keep on blocking and tackling for the next 5 or 10 years before we see the real transformation (…). We’re not there yet, but I think we’re on our way. That will be truly transformative of how the world works.

XRP as an alternative for SWIFT

Larsen then spoke about the Ripple Corridors and the technology that enables cross-border payments. The co-founder said that a change in the financial system is needed so that there is greater cooperation, development and interoperability between people and institutions to make it work smoothly:

That affects everyone, not just people who transfer value (…) It also affects you because it slows down the potential of the billions of people who participate in the global economy. It creates businesses that are basically stillborn because they cannot succeed in a world where moving value is this slow, this expensive (…) As we see it in systems like Swift, you know, days to move value, huge failure rates, you’re just blocking this potential and these new ideas.

Larsen also noted that the biggest impediment to the crypto industry is regulation and the legal framework. As reported by CNF, Ripple is one of the companies most involved in the search for a clear regulation and a robust legal framework for the crypto industry. The company opened a branch in Washington to work with regulators to solve this problem which, as Larsen said, is fundamental for the industry:

It’s going to take time, it’s going to seem frustrating because government and regulators work in a different cycle (…). But I think we’ll get there, we’re at the hard part of climbing the hill, but I think we’ll get there.

Finally, Larsen discussed the potential of XRP to replace the SWIFT payment system. Larsen said that the technology behind XRP would be a viable alternative to the traditional system, as opposed to proof of work models. This is because the XRP ledger does not need to rely on a group of miners. Consequently, there is no risk of a 51% attack. Otherwise, Larsen also pointed out the high energy consumption required by cryptocurrencies such as Bitcoin:

XRP can be a replacement for that inefficient (SWIFT) system (…). In many ways, maybe 80% of what they were doing was just fine, did not have to change. But there was this one key component of cross-border payments which was fundamentally broken because they were dependent on a system built in the 70s – SWIFT and this asynchronous Swift correspondent banking system, which is just a nightmare.

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