Thread by @TheLINKPill

All Federal Reserve Banks will adopt ISO 20022 on March 10, 2025.

This coincides with SWIFT mandating it’s 11,000 banks to adopt the program (right now it’s optional).

A 🧵 on ISO 20022, why it is important, the major players, and of @chainlink’s role.

To conduct business, financial institutions exchange large amounts of data with their customers and among themselves.

Such exchanges work if the sender and receiver have a common understanding of how to interpret the data.

Similar to how smart contracts eliminate the need for middlemen that introduces risk and additional cost, standard messaging platforms eliminate the need for human intervention to interpret the data.

Think of how much data needs processing...

The DTCC processes over $2 quadrillion in securities annually, and that’s only in North America.

BNY Mellon processes trillions daily in US Treasury bills.

There is roughly $700 trillion total global debt is processed. Institutions must ensure they are receiving accurate data.

The introduction of different messaging standards between institutions creates problems in automating these end-to-end transactional chains.

ISO 20022 standardizes transactional inputs and outputs across all messages across all financial institutions. All of them.

ISO 20022 is a messaging standard between financial institutions that includes payment transactions, securities trading and settlement information, credit and debt transactions and other financial information.

Such a standard is crucial for interoperability as we enter the Fourth Industrial Revolution. Remind you of anything?

$LINK #4IR #CCIP

chain.link/cross-chain

The largest financial institutions in the world, such as SWIFT and the Federal Reserve have committed to adopting the standard.

More on this….

Embedded within the ISO 20022 standard is the requirement for middleware to adapt the outputs of one messaging system to the inputs of another, so they can communicate.

There is one global standard middleware for such a task. $LINK

SWIFT banks, for example, currently utilize an MT messaging system under ISO 15022. The middleware required for ISO 20022 takes the data from one field in the MT message and moves it to the corresponding ISO 20022 message.

It interprets the data so it may be universally read.

This diagram nicely illustrates some of the (technical) advantages of ISO 20022 adoption, that include:

1. Less “false positive” messages interpreted
2. Higher throughput capacity
3. Increased interoperability between different systems and institutions.

SWIFT is a member-owned cooperative society that provides services related to transaction and payment execution.

Across their 11,000 global banks they process over $300 billion USD annually.

To be clear, the global banks run SWIFT.

SWIFT has mandated their 11,000 banks to transition from the MT standard to ISO 20022 as we begin to universally adopt one global standard for ALL financial transactions.

Adoption of the standard was delayed due to COVID-19.

There is a misconception that the standard must be implemented by November 2022. Adoption began this summer but SWIFT banks have until November 2025 to fully adopt and operationalize the standard.

The delay is due to each bank being responsible for the adoption/transition.

Although banks may temporarily elect to keep the MT standard for now, the transition to ISO 20022 has begun and will accelerate in November 2022.

These banks include global banks. For example, the Bank of England will adopt the standard in 2023.

corporates.db.com/files/document…

Attached from @DeutscheBank is an overview on the adoption by some national banking systems.

That is the newest (part 5) version of @DeutscheBank’s whitepaper on ISO 20022 adoption.

Often forgotten is part 2 developed in 2019. See page 19 on the adoption timeline provided by SWIFT.

Notice the symbol for “Significant Impact”. Look familiar?

corporates.db.com/files/document…

Very quietly in 2018 the Federal Reserve Board of Governors met off-site to request proposal on the adoption of ISO 20022 for the Fedwire Funds Service.

This service is the transfer funds mechanism that services banks, businesses & government agencies.

sullcrom.com/files/upload/S…

This information is now broadly available online, but a more in-depth overview on the rational to adopt the standard can be found here:
federalreserve.gov/newsevents/pre…

To be clear, when the Fed digitizes the dollar, it will be done using the ISO 20022 standard.

Recently in another offsite meeting (see a pattern?) the Fed announced full adoption of ISO 20022 will be done on March 10, 2025.

This coincides with the 2025 adoption deadline SWIFT imposed on all global banks.

frbservices.org/resources/fina…

So what? This began in 2016 when SWIFT selected @chainlink (known as SmartContract.com) to work on a proof on concept for bond coupon issuance and remittance.

The goal on the 2016 SWIFT-Chainlink proof of concept was to allow smart contracts (SC) to interact with data outside the financial network and while the SC issues payment on existing financial infrastructure (MT ISO 15022).

A summary of the proof of concept…

Ie. interest rates from banks are inputted into SC, LIBOR average rate generated, rate is inputted by an oracle into SC in a provable-trustworthy manner.

This data used by a “smart bond” to issue coupon payment and that is translated over SWIFT network

This is how Chainlink works today, and how it will be used to build on existing infrastructure. This can be applied to other industries as well, such an insurance.

Here is a list of use cases: blog.chain.link/smart-contract…

Chainlink provides a framework for Decentralized Oracle Networks (DONs) to provide data.

These DONs can be for bond interest rates, security valuation, weather and insurance data, the outcome of a sporting event…they can be for ANY data.

chain.link/whitepaper

ISO 20022 calls for a middleware to facilitate data flow.

Ask yourself this: is it a coincidence that the global financial infrastructure will be built by a start-up “randomly” selected in 2016?

Is it a coincidence that the WEF named SmartContract.com, the company behind @chainlink, as the tipping point of the fourth industrial revolution? (In 2017).

Is it a coincidence that SmartContract.com was registered by @SergeyNazarov several days before the release of the #Bitcoin whitepaper?

And what was the mission of Bitcoin? To revolutionize the financial infrastructure? Yes - but it was more a proof of concept for SCs.

But was #bitcoin a new concept in 2008? No. This research has been in development for decades.

Published in 1998, X-Cash: Executable Digital Cash is a “new financial instrument known as executable digits cash”

Remind you of anything?

This was published by @AriJuels, Chief Scientist at @chainlinklabs.

Ari coined the term Proof of Work, and is a top 5 global computer scientist.

And if you read the #bitcoin whitepaper you will see Satoshi references “we”. Satoshi is a team, who has moved on to greater things.

There is so, so much more. But this thread is to get you thinking.

Is it all a coincidence?

It doesn’t matter, because if you understand the tokenomics of Chainlink you understand there is the greatest asymmetrical bet of our lifetime.

The ecosystem has a series of positive feedback loops that will build on itself, propelling the price of $LINK as the security and use case of the network grows.

It is not how many you hold, but how long you can hold on for. Stay safe anon.

https://twitter.com/thelinkpill/status/1578467761570795520