IBM expands crypto footprint to include ‘IBM Blockchain World Wire’

  • By Tom Cleveland

  • March 25, 2019
  • 7:57 pm BST

IBM continues to expand its role in the crypto revolution, this time focusing on the cross-border remittance space. Its analysis has revealed that an archaic network of correspondent banking partners exists and that blockchain technology offers a way to optimize the never-ending series of intermediaries that must touch the transaction as it weaves its way across the planet. In order to improve upon the process, the firm has announced the creation of its “IBM Blockchain World Wire”.

Per one report: “IBM is paving the way for banks and other regulated financial institutions to join the blockchain revolution. Rather than going through a series of intermediaries when sending money across borders, IBM has created a real-time, global payments network to support cross-border transactions and foreign exchange in more than 50countries using digital assets, also known as cryptocurrencies or stable coins.”

IBM Blockchain World Wire will accelerate foreign exchange, cross border payments, and remittances by using the Stellar protocol as its backbone. In a way this announcement is not new news. IBM had mentioned as far back as October of 2017 that it was piloting its new prototype for today’s World Wire system. The new news today is that many customers now have free access to the system in several markets.

Marie Wieck, General Manager of IBM Blockchain, explained: “We’ve created a new type of payment network designed to accelerate remittances and transform cross-border payments to facilitate the movement of money in countries that need it most,” said. “By creating a network where financial institutions support multiple digital assets, we expect to spur innovation and improve financial inclusion worldwide.”

According to another spokesmen at IBM: “World Wire is the first blockchain network of its kind to integrate payment messaging, clearing and settlement on a single unified platform. Participants are also allowed to dynamically choose from a variety of digital assets for settlement. Currently, World Wire has enabled payment locations in 72 countries, with 48 currencies and 44 banking endpoints.”

Jesse Lund, head of IBM Blockchain, went on to add: “We’ve created a new type of payment network that is unique in the sense that it streamlines the ability of businesses and consumers to move money around the world in real time. This enables improved transparency without sacrificing the regulatory controls and policies we need in order to make sure that there aren’t bad actors in the system.”

The system leverages its relationship with Stronghold to allow for usage of Stellar Lumens (XLP) and a USD-backed stable coin, but the next step will be to accept other cryptos as well. Lund elaborated: “Personally, I think cryptocurrencies could very well serve as a viable settlement instrument. We’ve started with Lumens, which is the native asset of the Stellar network, but we already have the capacity to introduce other cryptocurrencies that could include Bitcoin or Ether. We will add more digital assets based on client demand and participants on the network.”

Participating members have requested that the stable coin be backed by U.S. Dollar reserves. Lund explained: “The USD stable coin is an FDIC insured coin that is pegged one-for-one with the U.S. Dollar. In fact, any USD stable coin on the World Wire network represents a literal claim on deposits with a chartered bank in the United States. This is just the beginning though, we are now getting demand from banks all over the world who want to issue their own stable coins. This network really has the potential to radically transform foreign exchange entirely.”

Lund also explained that the Stellar based approach is scalable, even to supporting as many as thousands of transactions per second. The IBM approach is in stark contrast to the one pursued by Facebook, in that the social media giant is attempting to leverage its customer base on an individual basis, whereas IBM is appealing to banks to offer a more convenient mechanism to their respective customer bases. It will be interesting to see on which side convenience carries the larger premium. In any event, the crypto community will be the overall beneficiary in the long run, no matter which approach is more favored in the marketplace.