German Online Bank Chooses Bitcoin Over SWIFT
inancial institution has been using the cryptocurrency to bypass the SWIFT
Bitbond, an online German bank founded by Radoslav Albrecht, has been using bitcoin, the flagship cryptocurrency, to transfer loans throughout the world in a fast, safe, and cost-efficient way.
According to a report published by Reuters, the financial institution has been using the cryptocurrency to bypass the SWIFT international transfer system to send money across the world. Speaking to the publication, Albrecht stated:
“Traditional money transfers are relatively costly due to currency exchange fees, and can take up to a few days. With Bitbond, payments work independently of where customers are. Via internet it is very, very quick and the fees are low.”
Bitbond’s loans work as clients only hold bitcoin for a small period of time – reportedly seconds or minutes – until the cryptocurrency is exchanged back into the fiat currency of the country the loan was sent to. The small wait allows them to mostly avoid bitcoin’s volatility.
The company’s service, according to Albrecht, has been growing in popularity since it was launched back in 2013. In 2016 the company became an officially licensed bank in Germany, which attracted various investors. Most of Bitbond’s clients are small business owners and freelancers, which means the loans the company handles don’t’ exceed $50,000.
While bitcoin has in the past been used as a collateral for loans, it has never been used to transfer credit internationally and as an alternative to the SWIFT system most financial institutions use. The service is notable, as some have been cut off from the system for various reasons.
If bitcoin and other cryptocurrencies start being used as an alternative to SWIFT, there’s no way to cut off any organization or individual from the system. While companies like Bitbond can deny them service, there may be others in the market willing to offer it.
Iran, for example, got cut off from the SWIFT system after the US imposed heavy sanctions on the country. While it initially started adopting bitcoin, its government soon rejected the cryptocurrency to work on its own national cryptocurrency, after its central bank banned cryptos.