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.”

 

About Richard Kastelein

Founder of industry publication Blockchain News, partner at ICO services collective CryptoAsset Design Group (helped raise over $200m+), director of education company Blockchain Partners (Oracle Partner) and ICO event organiser at leading industry event  CryptoFinancing (first ICO event in Europe) – Richard Kastelein is an award-winning publisher, innovation executive and entrepreneur. He sits on the advisory boards of half a dozen Blockchain startups and has written over 1200 articles on Blockchain technology and startups at Blockchain News and has also published pioneering articles on ICOs in Harvard Business Review and Venturebeat.
 
Kastelein has spoken (keynotes & panels) on Blockchain technology in Amsterdam, Antwerp, Barcelona, Beijing, Brussels, Bucharest, Dubai, Eindhoven, Gdansk, Groningen, the Hague, Helsinki, London, Manchester, Minsk, Nairobi, Nanchang, San Mateo, Shanghai,Tel Aviv and Venice. His network is global and extensive.
 
He is a Canadian (Dutch/Irish/English/Métis) whose writing career has ranged from the Canadian Native Press (Arctic) to the Caribbean & Europe. He’s written occasionally for Harvard Business Review, Wired, Venturebeat, The Guardian and Virgin.com and his work and ideas have been translated into Dutch, Greek, Polish, German and French.
 
A journalist by trade, an entrepreneur and adventurer at heart, Kastelein’s professional career has ranged from political publishing to TV technology, boatbuilding to judging startups, skippering yachts to marketing and more as he’s travelled for nearly 30 years as a Canadian expatriate living around the world.
 
In his 20s, he sailed around the world on small yachts and wrote a series of travel articles called, “The Hitchhiker’s Guide to the Seas’ travelling by hitching rides on yachts (1989) in major travel and yachting publications. He currently lives in Groningen, Netherlands where he’s raising three teenage daughters with his wife and sailing partner, Wieke Beenen.

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