Mitsubishi UFJ is one of the world’s largest banks, and it’s finally making a foray into the world of distributed ledger technology (DLT) payment networks. In a bid to develop its own network, it’s investing $1.5 million into creating the Global Open Network (GON) and is hoping to have it up and running by the end of the first half of 2020. It will be one of the first payment networks to come from a major bank and will rival Ripple’s xCurrent and xRapid platforms.
DLT is the Future of Payment Networks
The GON is touted to be able to handle more than a million transactions per second (TPS), a huge amount that no decentralized blockchain could handle. The advantage of using DLT over a decentralized blockchain like Bitcoin is that the platform can process more transactions per second and makes it infinitely scalable. Think of a DLT based payment system like a giant Google Sheet on steroids. As the instant you make a change to the database, it’s updated instantly on everyone else’s database. While a database like this is less secure than a decentralized system, it’s better suited to a banking situation.
Ripple’s Biggest Rival
Ripple has been hard at work signing banks up to its two platforms, xCurrent and xRapid. xCurrent works essentially exactly the same as Mitsubishi UFJ’s application will work, but is owned by Ripple – an entity that nobody really likes. xRapid, on the other hand, involves banks exchanging the currency into XRP – Ripple’s token – and sending it to the recipient’s bank where it’s converted to the local currency and credited to their account.
Currently, Ripple only has one bank using xRapid – not a great selling point. GON is likely to sign up major banks from around the globe with relative ease thanks to its heritage, reputation and wealth of partnerships with other banks around the globe. GON will prove to be Ripple’s biggest test yet, and it could even nudge out Ripple from the cross-border payment industry if it goes well.
The investment that Mitsubishi UFJ is making into this project is rather small as far as investments into DLT systems go, but other arms of Mitsubishi are already working on DLT technology. It could simply be repurposing one of these projects to for its banking arm. Either way. Mitsubishi UFJ is about to cement itself as a forward thinking and industry leader. Once GON goes live, banks will be clamoring to join the payment network.