TransferWise Sees Emerging Blockchain Technology As Difficult And Unwieldy To Utilize Its Benefits
As blockchain technology has been steadily making its way into the global economy, this unprecedented access into the financial market is starting to shake the foundations of traditional financial institutions, and could pose a greater threat to their longevity.
The growing technology which is indicative of the successful workings of cryptocurrency ecosystem and accounts for the growth of Bitcoin -thus making it the world’s most popular digital asset- has proved its worth, taking the erstwhile unknown virtual currency from nothing to becoming a force to reckon with.
The feat recorded by the technology is becoming increasingly infectious giving it a lee way to delve into the inner mechanisms of conservative financial system. But is it not likely operators of real finance will be happy by this development.
Hence, the potential success of blockchain tech in mainstream financing is seriously under doubt, with TransferWise casting doubt on the functionality of the system.
TransferWise, a London-based payments platform earlier criticized the technology, reportedly saying “it is yet to see anything good in the nascent technology”.
The company which was founded in Estonia but currently working out of the UK is firmly resistant to the enticements and ideas of blockchain technology, even with its measurable success, despite its infancy.
TransferWise’s service currently covers 70 countries in the world and allows clients to wire money to each other in the most cost-effective and fastest manner.
However, the firm’s owners have stated that the company isn’t enthusiastic on adopting the distributed ledger technology (DLT) as they do not see anything good about it yet.
Taavet Hinrikus, co-founder of TransferWise, who was speaking at the most recent edition of Fortune’s weekly episode of “Balancing the Ledger” reiterated the board’s resolution not to join the DLT bandwagon now.
Although Hinrikus admitted that in principle the technology sounds like a great idea, it is yet to see if it will have real world applicability.
Hinrikus says that the task of deploying blockchain technology in real and practical use is a different ballgame. Hence, the firm is being careful not to consider a tech that will in the long run, add no value to the company.
“We’ve heard this dream many times from different sources. However if you start digging into it, you realize it looks good on paper, but in reality, it’s tough to make use of it,”
Meanwhile, Hinrikus confessed that his firm has carried out some experimental tests on some distributed legers including Ripple, without much success. He says the company so far hasn’t derived any real economic, operational or promotional value outside the mere freedom to test-run the technology.
Through TransferWise, transfer of money is made almost instantly. For example, according to Kinrikus, clients will only need to use 15 seconds or less to make money transfer from Australia to the United Kingdom. In fact, the charge on such transaction is as low as 1 percent.
Hinrikus admits that despite the low service charge, the company still makes some profit and yet does not run on loss. In this sense, deploying any new technology for operations of the firm means that technology will increase the profit margin add extra value in terms of increased efficiency.
Interestingly, Transferwise, which began full operations in 2011, operates on its own mechanism (proprietary payment network) without having to rely on SWIFT to execute cross-border transactions and make service payments to foreign countries.
With TransferWise payment systems, clients will send money via the internet straight to the receiver’s bank accounts without the need for any middle men which unnecessarily costs extra charge.
TransferWise Not Totally Opposed To The Technology
Yet, Hinrikus still leaves room for future deployment of blockchain technology, especially Ripple, if the need arises and the company sees good and convincing reasons to do so.
“…If Ripple or any other blockchain gets significant adoption, and it materially helps us do things cheaper and faster, we’d love to [integrate it], but so far we haven’t found one,”