International Business Machines Corp. (IBM) has announced the launch of a new product called “Blockchain World Wire”, a blockchain-based payment system that can revolutionize cross-border payments. The system has been in the beta phase for a long time. Its long-awaited launch will facilitate instant clearing and settlement of all transactions using Stellar’s blockchain network, a distributed ledger network that connects banks, payments systems and people to facilitate low-cost, cross-asset transfers. (See also, How Did Stellar Become The Sixth-Largest Crypto? )
Such systems, which support the transfer of digital assets over a distributed network in real time, help eliminate the role of banking intermediaries, their associated costs, and the time lags that are an integral part of present-day cross-border payment systems. They allow significant benefits in terms of high speed for payment processing, low to nil transaction costs, and increased operational efficiency.
Project APIs to Support Traditional Banking System
The project provides dedicated application programming interfaces (API), called World Wire APIs, which can be conveniently integrated into the present day traditional payments system of the banks. These APIs will allow a sender’s bank to convert the fiat money into a digital asset which can be sent over to the recipient’s bank. The latter’s bank will then covert the received digital assets into the respective fiat money of the associated country and credit it to the recipient’s account. Immutable recording of all transactions on blockchain allows for the necessary recordkeeping, audit trail, and clearing.
The company explains the working of World Wire: "Two financial institutions transacting together agree to use a stable coin, central bank digital currency or other digital asset as the bridge asset between any two fiat currencies. The digital asset facilitates the trade and supplies important settlement instructions."
IBM will demo this product at the Sibos Banking Conference in October this year, according to FinExtra.
Blockchain World Wire to Compete Against Ripple
Claiming that World Wire "can simultaneously clear and settle cross-border payments in near real-time," the offering will compete against other blockchain-based payment networks like Ripple and will be aimed at institutional use. Ripple already offers similar blockchain-based payment processing systems, called xCurrent and xRapid. Other global enterprises, like Japanese digital services firm GMO Internet and Alibaba Inc. (BABA) affiliate Ant Financial, are also working on similar offerings.
The initiative comes on the back of recent development by IBM when it announced in July about partnering with startup Stronghold and Stellar blockchain to launch USD Anchor, a low-volatility stable coin that can be used to facilitate cross-border payments that can operate within the regulatory ambit. (See also, IBM Working on 'Stablecoin' Tied to US Dollar.)
Earlier in October, IBM initiated work on the stellar project, following which it indicated its interest in expanding the business applications and use cases of cryptocurrencies. (See also, IBM Launches Stablecoin Backed By FDIC-Insured Banks.)
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