SWIFT Report on Blockchain: ‘Unrealistic expectations’ – Meanwhile they are Hacked for Well Over $80 Million

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Right in the midst of two hacker fiascos putting The Society for Worldwide Interbank Financial Telecommunication (SWIFT) firmly in the ‘more holes than a golf course’ camp, a research paper commissioned by their research arm was published touting that Blockchain was mythical when it came to getting rid of third parties in trades. 

Bad timing or what? This of course fell right in the middle of an investigation to solve the $81 million heist from the central bank of Bangladesh in February, where attackers were able to ‘compel’ the Federal Reserve Bank of New York to move money to accounts in the Philippines where it disappeared and a second attack which involved a commercial bank where SWIFT is holding out how much was nicked. The report is probably the most critical paper published on Blockchain – but they have hunted down every Blockchain critic on the planet and obvious framed the questions to cast doubt on Blockchain as a solution. 

That’s not really surprising as a decentralised Blockchain solution kind of rids the need for their ‘middleman’ services as a ‘trust agent’ for financial transactions. 

From the report:

The idea is that two or more parties would be able to use blockchain technology to carry out a trade and this could all be done without the need for any other interference. But the SWIFT Institute said that a central third party role would still exist, albeit more narrowly, as a mean of confirming identity and existence of an asset, as well as dispute resolution and enforcing legal obligations.

In a piece on the SWIFT report at CNBC, commenter The Real Stig nailed it

“The viability of our business is under severe threat from this new technology. Please ignore this technology and join us us in hoping it will just go away.”

In a recent article headlined, “Swift Is Hacked Again. The Bitcoin/Blockchain Fat Lady Sings,” Seeking Alpha financial writer Kurt Dew unloaded:

“It is time to adopt some kind of distributed ledger.”

The SWIFT payment system failed again this week. The tone of Swift’s announcement intimated the end of life on the planet earth as we know it. Swift’s description of the system’s attackers was apocalyptic, and did nothing to minimize the skills of the attackers, adding that the funds seized might be, of course, reinvested to give the hackers a kind of turboboost of evil. My sources tell me the culprit is Brainiac from the planet Zod.

Of course there is nothing funny about this situation, even if Swift’s “chicken little” corporate reaction was pretty funny. The real lesson of this event is deadly earnest and, I believe, fully anticipated by most specialists in the security of our financial system. This event, though, was the Fat Lady’s Song. The banks, exchanges, clearers like Swift, DDTC, and so on, are going to have to share something with the public that insiders already know.

The party is over for the old, permissioned, firewall based, electronic fortress, concept of trust-in-payments systems. And the alternative is very far from obvious.

NewsBTC also got into the action.

“…this is another prime example of why the legacy system – and its archaic underpinning technology – need to be replaced with a more modern solution sooner rather than later. Using firewalls used to be an excellent way to protect financial systems, but hackers have become a lot smarter throughout the years. This leaves security experts well behind the curve of technological innovation, which hackers will gladly take advantage of.”

 

Richard Kastelein

About Richard Kastelein

Founder, Publisher and Editor in Chief of Blockchain News and co-founder and director at Blockchain Partners in London/Amsterdam/NYC, Richard Kastelein is also an advisor with a number Blockchain startups doing ICOs including DECENT.ch, Inchain, Humaniq, Chronobank, eGaas and others.

He is regarded as one of the top journalists by the Blockchain and fintech communities – as is evident by his entry in the Top 150 Fintech journalists online and in the top 10 of the Blockchain Top 100 List. As a prominent keynote presenter, he has spoken on Blockchain at events in Gdansk, Amsterdam, Minsk, Dubai, Antwerp, Eindhoven etc, where he helped spread the cause for Blockchain technology and crypto-currency and, consequently, has built a notable network inthe scene.

In 2013, the European Commission appointed him as an expert for overseeing financing for emerging startups as a part of the European Commission’s 90 billion euro Horizon 2020 project, created in Brussels to promote innovation as a driving force of job creation and business ventures across Europe. He has also worked as an external expert for Innovate UK since 2012, judging startups for the UK government.

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