IBM and Stellar Team Up for International Payment System
IBM has announced the release of Blockchain World Wire, a cross-border payment system developed in partnership with crypto startup Stellar. This brings the previously announced project out of beta and gives Stellar a boost against rival Ripple.
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New Plumbing Proposed for
International Payment Systems
With World Wire, IBM promises to make cross-border payments happen in “near real-time” using digital assets – such as Stellar’s native crypto Lumens (XLM) or another token – which would be transferred between banks or money transfer operators using Stellar’s protocol.
A document provided by IBM shows how the new system would replace the multiple intermediaries that are currently used in these kinds of transactions. IBM promises fast payment processing and fewer parties involved in a transaction, which should make it more efficient and transparent.
IBM and Stellar have been working together since at least October of 2017, when they announced a pilot project to build an international payment network across multiple countries in the South Pacific. IBM has been a leader in creating applications for blockchain technology, particularly in supply chain and finance.
In addition to IBM’s own Hyperledger platform, Stellar’s blockchain has been a favorite with the firm. Back in May, IBM revealed a partnership with environmental startup Veridium Labs which used Stellar’s blockchain to tokenize carbon offset credits. That project saw the creation of a new cryptocurrency called “Verde” which will be developed on Stellar.
Stellar Subject of Many Rumors in 2018,
But Fewer Confirmed Deals
Stellar has been at the center of many unconfirmed reports in the last year. In August, Business Insider reported that executives from Facebook met with Stellar to discuss using its technology as part of a new Facebook internal payment system. The social media giant, however, denied the rumors, telling the press that no discussions had taken place.
Another unconfirmed report in June held that Stellar was in talks to purchase blockchain startup Chain for an estimated $500 million USD. As with the Facebook report, nothing was confirmed and no acquisition has been made public since. Thus, for Stellar, having a confirmed deal with IBM is good news while also lending credence to the earlier reports.
Competition with Ripple Heating Up
One important part of the World Wire product is the fact that IBM and Stellar are challenging fellow blockchain/distributed ledger technology (DLT) startups head-on in the competitive international payments space. It bears mentioning that the technology behind both Stellar and Ripple Labs was created by Jed McCaleb, who served as Chief Technology Officer of Ripple before leaving to found Stellar.
Ripple has been developing blockchain-based transfer and payment systems and working tirelessly to convince financial institutions to use its products. They developed a payment app in conjunction with a consortium of 61 Japanese banks, CBNC reported in March. However, that product uses a settlement technology called xCurrent, which doesn’t rely at all on Ripple’s XRP token, which has led to criticism.
Earlier this year, news broke that Western Union, MoneyGram, and Cambridge Global Payments would be testing Ripple’s xRapid system, which does use XRP. But four months later, Western Union CEO Hikmet Ersek said that the system was “still too expensive,” and the company hadn’t seen the efficiency gains it had hoped for, though the trial was still ongoing. In July, Western Union filed a patent application that mentioned blockchain and cryptocurrency – but that made no mention of Ripple or XRP.
But the news isn’t all bad for Ripple, as in July Facebook’s former global director of financial services and payments partnerships, Kahina Van Dyke, left the company to join Ripple as a senior vice president of business and corporate development. Since, then however, there has been radio silence, with Van Dyke’s Twitter account having gone dormant since the announcement.
XLM and XRP Both Down in 2018,
But Stellar Has the Edge
The price of Stellar’s XLM is up around 1.6 percent in the past 24 hours to almost 22.8 cents USD. It is down, however, nearly 75 percent from a high of around 91 cents USD back in January. That compares fairly well, though, with Ripple, which is off 91 percent since its winter high and is currently sitting at 33 cents USD.
Have your say. Will Stellar or Ripple come out the winner in the competition for a new blockchain-based international payment system? Or perhaps another firm entirely?
Images via Pixabay