The SWIFT Institute which is funded by SWIFT (Society for Worldwide Interbank Financial Telecommunication), "The global provider of secure financial messaging services" recently posted a Call for Proposals: “Virtual Currencies: What are the ‘real’ risks?:”.
“The SWIFT Institute invites proposals for research on the recent developments in virtual (including digital and crypto currencies) currency schemes (e.g. Bitcoin, Litecoin, PPCoin, BBQcoin, Ven, etc.).”
And there is a substantial bounty for the researcher who receives the grant:
“A grant of EUR 15,000 will be awarded to the author of the selected proposal. 50% will be paid immediately; the remaining 50% will be paid on acceptance of a working paper.”
The Swift Institute arm of SWIFT (which additionally provides secretariat services to the Institute) was founded in April 2012 and according to its website Its aims to:
Extend understanding of current practice and future needs in global financial services, with a particular focus on transaction banking.
Foster independent research by giving grants, access to research data and publication opportunities for approved projects.
Act as a catalyst for bringing the SWIFT community and academics together to explore ideas, share knowledge and extend mutual understanding.
The Swift Institute also just announced Sibos University which features leading academics addressing important issues in the global financial industry. According to a “Hot Topic” post by the SWIFT Institute, “Virtual Currencies – A Question of Trust,” Professor Dr. Ron Berndsen, Head of the Oversight Department of De Nederlandsche Bank and Endowed Professor of Financial Infrastructure and Systemic Risk at the University of Tilburg, will be discussing virtual currencies and how they fit into his concept of “Payments Warehouse” (i.e. interlocking methods of modern payment systems) at Sibos University in September 2014 in Boston. The article was fairly even tempered but included Dr. Ron Berndsen’s thoughts on an “Ultimate Warehouse” that “...perhaps one day there would be a worldwide currency with no governance and with no formal authority or country responsible for managing the currency."
No Stranger to Bitcoin
SWIFT is no stranger to Bitcoin. In May 2013, Jon Matonis, now the Executive Director of the Bitcoin Foundation wrote in an article for Forbes titled Bitcoin Comes to SWIFT that “SWIFT readily embraces the study of emerging payment paradigms and the potential for disruptive operators to alter the landscape.” Matonis was a panelist at a SWIFT conference at the time, representing new payment approaches. Matonis’ words resonated when he re-tweeted comments from the SWIFT Sibos Dubai conference last September: “SWIFT CEO at #Sibos: "I would not see why we at Swift could not send transactions in #bitcoin as a currency" via @petervan @GeoLeib.” (Twitter). Patrick Murck, General Counsel, Bitcoin Foundation was also a panelist at Sibos Dubai.
So it should come to no surprise that Matonis will be a Speaker at Sibos University this September along with cryptocurrency luminaries Jeremy Allaire (Circle), Barry Silbert (SecondMarket / Bitcoin Investment Trust), Chris Larsen (Ripple) Marc Hochstein (American Banker) along with other familiar names and faces.
SWIFT has additionally been keeping track of Bitcoin by posting articles such as “The Bitcoin conundrum” (“Bitcoin’s two challenges for the long term are, first, that it doesn’t exist, and secondly, that it isn’t taken seriously enough where it matters...”) and more on its Dialogue Online “Voice of the SWIFT Community.”
Recently a discussion of SWIFT made the front page of the Bitcoin sub-Reddit (now with more than 130,000 subscribers) when the Chief Technology Officer of payment processor Stripe Greg Brockman posted on the Stripe Blog Stripe Bitcoin: the Stripe perspective under the sub-header “Contrast with other global networks” that :
“... When sending money with Swift, one bank says to another ‘I’m going to send you 100 euros’, and then finds a path of peered banks to actually move the money. Fees and currency conversion are handled in an ad hoc (and often surprising) fashion. The more you can bake ‘what will happen’ into the network protocol, the more understandable and usable the resulting system will be. Bitcoin does better than Swift by including money movement and transaction fees in the protocol, though it similarly lacks native currency conversion...’
Just a few days earlier, Martin Ruubel Director, Special Projects of Internet Security Firm Guardtime wrote in a company blog post “What Bitcoin means for SWIFT: Technological Progress and Provable Security:” “... SWIFT has continually struggled to move beyond inter-bank payments and is in danger of becoming increasingly irrelevant as other payment schemes [i.e. Bitcoin] continue to gain traction...”
Last November New York Magazine’s Kevin Roose wrote an article “Bitcoin Isn't the Future of Money, But It Could Be the Future of Moving Money Around” and noted that:
“Right now, the process of moving money around the world is a nightmare. Most cross-border payments are made with the help of one or more of two systems: SWIFT and CHIPS (Society for Worldwide Interbank Financial Telecommunication and Clearing House Interbank Payment System, respectively). In very basic terms, SWIFT is the alert system for payments — it tells banks when money has been sent and received — and CHIPS is the bookkeeper that actually does the tallying and transferring…”
“...[E]veryone currently building venture-backed Bitcoin gizmos should refocus their efforts into developing a secure, stable platform for cross-border payments, using Bitcoin as the new and improved middle layer…”
Roose explains that in the United States the ACH (Automated Clearing House) system is used and has many of the complexities as SWIFT. In this regards I would recommend listening to Episode 489: The Invisible Plumbing Of Our Economy on NPR’s Planet Money which delved into the complexities (peculiarities?) of the ACH system and why it took five days to deposit funds from their Kickstarter campaign into their bank account.
The Race is Not to the Swift or the Battle to the Strong
SWIFT made international headlines (e.g. “New Sanction Severely Limits Iran's Global Commerce”) back in 2012 when SWIFT reported that “SWIFT instructed to disconnect sanctioned Iranian banks following EU Council decision:”
“Disconnecting banks is an extraordinary and unprecedented step for SWIFT. It is a direct result of international and multilateral action to intensify financial sanctions against Iran.”
Bitcoin pundit (rabblerouser?) Max Keiser noted in a tweet last Thanksgiving that one doesn’t need to ask or seek permission to use Bitcoin---in response to a deal between the Obama administration and Iran (See Forbes “Breakthrough deal curbs Iran's nuclear activity”):
Of course Its not only rogue nation states such as Iran that have to work outside and around traditional banking channels. The Gameover ZeuS Trojan (GOZ) was updated earlier this year to "steal both Bitcoin wallets and the passwords used to encrypt them." Its operator allegedly sought to launder these funds outside of traditional channel according to an FBI declaration at the Department of Justice (PDF):
In terms of dollar amounts, the biggest threat represented by GOZ is the ability to utilize a victim's banking credentials to send nearly instantaneous wire payments to international
beneficiaries....Most U.S. companies utilize their corporate financial accounts to send payments, either to employees or to vendors. Wire payments, according to the SWIFT wire payment system, is one such payment system employed by most U.S. banks. The GOZ operators discovered a mechanism by which to send international payments while avoiding all of the traditional safeguards associated with transmitting wires internationally.”
You Have to Be in it To Win It
This grant competition comes on the heels of Let’s Talk Bitcoin’s breaking news story that the National Science Foundation awarded a Princeton researcher a $500,000 cryptocurrency grant for research on “Addressing the challenges of cryptocurrencies: Security, anonymity, stability.” The Bitcoin Foundation grant process was also discussed and we noted that applications for the Q3 2014 Bitcoin Foundation Grant are due by September 1st, 2014 according to a recent blog post at the Bitcoin Foundation. I spoke with Jinyoung Lee Englund Director of Marketing & Communications for the Bitcoin Foundation who said that the Foundation would be rolling out a new website around the time this article is published and that it will have a home for Foundation grants (which will give statistics and transparency to the program).
The SWIFT Institute’s Call for Proposals notes that currently there are estimated 40-80K Bitcoin transactions per day and this seems to agree with Coinometrics (62,500) as I write this over the weekend.
Some of the questions for the research paper include:
“...Do the lower transaction costs and development of e-commerce outweigh the resources expended in “mining”virtual currencies? Is there a net negative or positive correlation to GDP?”
“... Is there systemic risk if virtual currencies take off and become accepted as a “money substitute”?..”
In practice, just how ‘easy’ is it to engage in a virtual currency transaction compared
to the fiat system generally used today?
Proposals must be submitted no later than August 20th 2014 and I suppose that is CEST Brussels time but I recommend checking with the email contact Peter Ware in this regards.
Good luck submitting your proposal and be sure to let us know over here at Let’s Talk Bitcoin if this article alerted you of this grant competition---and if you win the grant!.
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Disclosure: Please note author of this article will receive LTBcoin crypto-rewards for writing this article