Unlike many industries which are still trying to figure out how to use cryptocurrency to enhance their services and progress their technology, global banking seems ripe for the picking since it’s a natural fit for blockchain. Bitcoin would seem like a contender, but with concentrated mining operations centered in Asia, and doggedly slow transaction speeds, a newer, more efficient and more decentralized coin will eventually fit the bill. And IBM may have a solution.
To solve the speed limitation, IBM has launched a program allowing consumers and merchants in the South Pacific region to transact across borders, via traditional banking partners, but with the speed and efficiency of the Stellar blockchain.
Why Did IBM Choose Stellar?
Projects like Ripple are already pushing deep into the world of global banking and may well be on their way to replacing traditional bank-to-bank payments, so why would IBM choose the Stellar project to build with?
The answer, from IBM’s perspective, boils down to a few basics which made Stellar the optimal choice. According to Jo Lang of IBM Blockchain Financial Solutions, “Bitcoin would have been a non-starter. One, it is primarily mined in China – our clients are not there, and I’ll just leave it there.”
When asked about the use of Ripple, Lang said ownership of the organization is fairly opaque, but IBM has done business with Ripple on other projects.
Stellar offered the combination IBM was looking for in terms of non-profit status coupled with an open source codebase, a well-developed software API, and the technology to make it work.
Furthermore, Stellar can support any asset type on the network and has the ability to scale which provides the foundation for future growth well beyond the South Pacific.
IBM’s Stronghold USD
The other obvious reason why IBM is launching the World Wire service with Stellar is because Stronghold USD, a stablecoin created by the company pegged to the value of the U.S. dollar, currently operates on the Stellar blockchain platform.
“The token allows folks to do payments, foreign exchange between companies in a very seamless and frictionless and more secure way,” according to Stronghold USD founder and Chief Executive, Tammy Camp.
IBM will use Stronghold USDs on the World Wire payment system since the currency is designed for businesses and multinational corporations for asset transfers.
Moving capital internationally has traditionally been time-consuming and costly. It’s costly for banks, who must maintain reserves of currency for each country they’re banking with, and it’s costly for consumers in terms of transaction speed and associated fees.
Under IBM’s payment program, called the IBM Blockchain World Wire, banks will perform transfers from country to the county using Lumens (XLM), the native cryptocurrency on the Stellar blockchain.
Image courtesy of IBM
The IBM World Wire will give users near real-time payment settling across countries for almost no cost and without the added burden of maintaining a host of foreign currencies.
Stellar Value Rises on Headlines
When the IBM partnership was first announced in October of 2017, the value of Lumens jumped 100% at the time. Stellar has risen in market share over the past 12 months, and with rumors of XLM soon trading on Coinbase, the price continues to be a bright spot in a slow 2018 crypto market.