Application of Blockchain in Overseas Fund Transfer

By: Rajan

Blockchain technology is often termed as disruptive technology as it has the potential to fundamentally change the way various industries work. A blockchain can be defined as a collection of immutable records linked by a cryptographic hash and stored in a distributed manner and wherever transparency, reliability, and security are required Blockchain will have application in that field. Healthcare, supply chain, manufacturing, and retail are some of the examples of industries that can benefit most from Blockchain technology. Due to the huge popularity of Bitcoin, the name has almost become synonymous to Blockchain but as mentioned this technology has huge potential in diverse areas. Bitcoin attracted huge attention as it has deeply impacted the traditional financial systems. 

The traditional financial system is marred by many shortcomings. Firstly, the average transaction settlement time varies from 24 hours to three days and things can become even worse in the case of overseas fund transfer where banks generally don’t have direct communication so for making such transfer the services of SWIFT (Society for Worldwide Interbank Financial Telecommunication) [1] are required and these services come at a price. Further, only transfer orders can be made through SWIFT. For actual fund transfer services of other parties are required. Moreover, some serious security breaches have also occurred in this system of transfer. For example, in 2016 hackers were able to steal the US $101 million from Bangladesh Bank by issuing fraudulent instructions [2]. In India US $1.4 billion was scammed from Punjab National Bank by issuing a fraudulent letter of understanding [3]. So the overseas fund transfer is not only a costly and time-consuming affair but also has some serious loopholes. Here, Blockchain can play a pivotal role in making these transactions secure and hassle-free. Figure 1 shows the key advantages of incorporating blockchain in overseas fund transfer.

Blockchain is a distributed ledger that doesn’t need any centralized authority to authorize a transaction. In the blockchain paradigm, a copy of the blockchain is stored on every participant’s system. New blocks are added to the blockchain by a process called mining. Here, miners perform the necessary computation to execute a transaction and in return, they get some rewards as incentives. For example, for committing a Bitcoin transaction, miners get some Bitcoin as a reward. A consensus protocol also plays a pivotal role in maintaining the integrity of the blockchain. Whenever a hacker tries to fraudulently modify the data, even if he was able to modify data at one location, blockchain have many other copies stored at different locations, and in case of any mismatch in copies, services of consensus protocol are required and the copy which is stored at more than 51% of the nodes is considered and rest are discarded. So, in order to temper the data stored in a blockchain, a hacker must hack into more than 50% of the nodes, and that too in a very short duration of time which is nearly impossible task to accomplish. This inherent immutability and distributed property of blockchain make it an ideal candidate for the management of overseas transactions. Firstly, the average time for finalizing a blockchain transaction is 10 minute which is a huge upgrade over the existing system and secondly, no centralized authority is required for authorizing the transaction, that means a huge reduction in the cost incurred. So, it could be concluded that blockchain could make fund transfer seamless and faster but do have some fair share of issues associated with it.

Figure 1. Advantage of using Blockchain in Overseas Fund Transfer [4]

The level of anonymity and security in the blockchain is so high that sometimes it itself becomes a problem for law enforcement agencies. This technology could be misused by some malicious persons for funding illegal activities for example Bitcoin is the most common way of payment in the dark web market for purchasing illegal goods. Further, blockchain technology is still in the incipient stages of its development and it has a long way to go before it could replace existing financial systems but it could be said without doubt that it is a promising technology and will have a pivotal part in shaping many future technologies.

Following are some of the significant research contributions in this field and possible research directions:

  • The authors of [5] investigated both blockchain and SWIFT technologies to see if blockchain technology has the capacity to revolutionise a traditional sector and how this can be accomplished.
  • In [6] a consortium blockchain-based overseas fund transfer mechanism is presented. They have used the Hyperledger Fabric Blockchain technology for the fund transfers, and also created a web-based user interface.
  • The existing system’s transaction delays, intermediary failures, and recurrent expenses can all be avoided by using Blockchain Technology for international financial transfers.
  • Blockchain based overseas fund transfer is quite faster than the traditional SWIFT based fund transfer, which usually takes 1-2 days.
  • Blockchain-based fund transfer assures security, transparency and reliability. However, there are several factors like hardware, the number of nodes in the network, the resources per node, and the block length which greatly affects the speed and scalability [6].
  • One can further explore the suitable blockchain-based platform for the efficient implementation of such systems.



[2] “The great Bangladesh cyber heist shows truth is stranger than fiction“. Dhaka Tribune. 12 March 2016. Retrieved 25 May 2018.

[3] “PNB will honour commitments to banks in LoU case”. The Economic Times. 28 March 2018. Retrieved 1 June 2018.


[5] Qiu, T., Zhang, R., & Gao, Y. (2019). Ripple vs. SWIFT: Transforming cross border remittance using blockchain technology. Procedia Computer Science, 147, 428–434.

[6] Patil, P., Sangeetha, M., & Bhaskar, V. (2021). A Consortium Blockchain Based Overseas Fund Transfer System. Wireless Personal Communications, 1-23.

[7] M.Ali (2020), Blockchain Technology, Insights2Techinfo, pp.1

Cite this article as:

Rajan (2020) Application of Blockchain in Overseas Fund Transfer, Insights2Techinfo, pp.1

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