Computing and software stalwart IBM has announced the launch of its new blockchain-based venture – a payments platform, dubbed IBM Blockchain World Wire. The brand new solution is powered by the Stellar blockchain, which is the 6th-biggest virtual currency as of press time.
World Wire is a financial instrument aimed at institutional investors that, “can simultaneously clear and settle cross-border payments in near real-time.” According to the website, using World Wire allows to, “replace costly opacity with affordable transparency – and that can bring greater financial opportunity to all.“
IBM has provided an explanatory document about its new product, which states that “The solution uses digital assets to settle transactions — serving as an agreed-upon store of value exchanged between parties — as well as integrating payment instruction messages. It all means funds can now be transferred at a fraction of the cost and time of traditional correspondent banking.“
Institutions using the platform will be able to use a virtual currency of their choice to link the two fiat currencies. The underlying mechanism is actually pretty simple: first of all, institutions use their existing systems to convert their fiat money into crypto. The crypto is then transmitted to another institution (usually, a bank) within seconds, where it is re-converted into the second fiat currency.
This mechanism allows for rapid and flawless cross-border payments, with another benefit being transparency – all transactions are immutably recorded on the Stellar blockchain. In addition to clarity and speed, other bonuses include reduced conflict resolution times and significantly lower costs. World Wire demo will reportedly be presented at the Sibos banking conference in October.
Jed McCaleb, co-founder of the Stellar Development Foundation highlighted the huge potential of World Wire claiming that, “IBM’s implementation of the Stellar protocol has the potential to change the way money is moved around the world, helping to drastically improve international transactions and advancing financial inclusion in developing nations.”
World Wire looks to be a direct competitor of Ripple’s institutional solutions, such as xCurrent and xRapid. They have been seeing increased use, with banking giant Santander using xCurrent to power its own cross-border payments platform One Pay FX. However, concerns about Ripple remain, due to scalability issues, as well as uncertainty whether it should be considered a security or not.
IBM’s interest in blockchain technology has been well-documented as the company has been devoting a sizeable amount of resources towards its research and development. According to a study published earlier this week, IBM has filed 89 blockchain-related patent applications as of August 10th, which is the second-best result worldwide, trailing Chinese retail giant Alibaba by a single application.
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