It seems that the road to using blockchain technology to process international payments is a bit longer than anticipated, according to David Schwartz, Ripple’s chief cryptographer.
“I will concede, we haven’t gotten there yet,” he said during an interview.
xCurrent, the solution that Ripple offers to banks that wish to settle international transactions through something called “bi-directional messaging,” isn’t a blockchain, according to Schwartz. Instead, it’s a simple messaging solution that banks can use to talk to each other when settling a payment.
Many banks tested the solution, but we don’t know exactly how many got around to implementing it into their infrastructures. Back in April, we became aware of a full-scale implementation of xCurrent by Banco Santander, a bank in Spain, that uses it for its forex system. However, it appears that banks are rather conservative on the matter of pure blockchain settlements.
“We started out with your classic blockchain, which we love. The feedback from banks is you can’t put the whole world on a blockchain,” said Marcus Treacher, SVP of customer success, Ripple. What blockchain technology lacks, according to the banks that spoke with Ripple, is scalability and transaction privacy.
“What we hear from many of our customers is that it’s imperative to keep their transactions private, process thousands every second, and accommodate every type of currency and asset imaginable,” Schwartz added.
The sum of all of this is that banks aren’t currently satisfied with the blockchain solutions currently available, even Ripple’s xRapid platform, which works on the XRP ledger.
It’s only a matter of time, however, before banks start getting interested in the technology. It took a while before major investment firms were pursuing the possibilities of the internet. Whether outside firms start listening to the banks, or they do it themselves is still an open question.