Chainlink, a prominent smart contract oracle network, and SWIFT, the Society for Worldwide Interbank Financial Telecommunication, are partnering to try to bridge the gap between traditional banks and blockchains.
On Wednesday, Chainlink and SWIFT announced they’re working on “an initial proof of concept” using Chainlink’s cross-chain interoperability protocol (CCIP), which provides a standard for communication between blockchains. In plain English, this means that the 11,000 banks connected to SWIFT will have the option to engage in token transfers across chains—a typically very risky endeavor.
Currently, most blockchains can’t talk to each other. An application on one blockchain, like Ethereum, can’t communicate with another application on, say, Solana. While cross-chain bridges attempt to help with this issue, allowing users to move digital assets from one chain to another, these bridges are often targeted by hackers. Bridges are vulnerable because they’re only as safe as their design—which hasn’t been great in most cases. Case in point: About $2 billion in cryptocurrency has been stolen in cross-chain bridge hacks just this year.
But Chainlink, unsurprisingly, touts its CCIP as secure, dependable infrastructure. And therefore, Sergey Nazarov, cofounder of Chainlink, sees the network’s partnership with SWIFT as a step toward adoption for DLT (distributed ledger technology) blockchains in capital markets.
Though skeptics—including even Ethereum creator Vitalik Buterin—aren’t sold on a cross-chain future owing to security reasons, Nazarov is.
“I don’t think there’s been bridges that have generated the necessary security,” Nazarov told Fortune at Chainlink’s SmartCon in New York. “But that is what CCIP seeks to solve. And I don’t think it’s an intractable problem. I think it’s a solvable problem.”
CCIP is focused on “making applications made up of multiple contracts on multiple chains,” Nazarov explains, which is “pretty logical,” he said, mentioning how developers for the “vast majority” of mainstream applications use “multiple services from multiple clouds all working together.”
Developers in crypto should have this same ability with cross-chain applications as well, Nazarov said. “The cross-chain side of things is a very big deal.”
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