IBM Launches Blockchain Based Payment Using Stellar

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Last month, an IBM executive hinted at the company launching a cross border payment system in partnership with Stellar (XLM) coin. Jesse Lund, said that the program would allow payments from anywhere in the world, in a quick and simple way. However, at the time the news was unofficial but left no doubts that it would be ambitious.

Yesterday, the information was verified and the payment system is called IBM Blockchain World Wire using the Stellar protocol. The program is intended to facilitate cross border transactions and enable point to point money transfers that will navigate the complexities surrounding conventional correspondence banking.

Prior to the unveiling today, Mr. Lund had hinted that the service would be available in about 50 countries and would be used in as many as 40 banks although this information has not been put out there. The concept of using cryptocurrencies to effectively transfer money across borders has also been applied by Ripple before. The entry of fintech into international money transfer is a positive stride that puts in faith in crypto and further works to eliminate weak cryptocurrencies that may not be able to evolve and rise up to the challenge in the future.

The best part is that traditional economy pushers are quickly adopting the use of cryptocurrencies. For example, MoneyGram became the first to announce that they were going to test the Ripple program. Western Union was quick to follow. Shortly after, Brazilian firm BeeTech joined forces with Singapore based InstaReM and signed up with Ripple to make transactions between South America and Asia-Pacific quicker.   

As of January 2019, these banks; Credit Agricol in France, IndusInd Bank in India and the Itau Unibanco Holding in South America had adopted the Ripple money transfer system. Since its inception, this is a huge stride in cryptocurrency advancement and proves that the innovation is no longer at its infancy. If big enterprises and companies are paying attention to this, with their resources, IT personnel and tools will quickly pave way for even more adoption and support for this innovation.

As it stands, the IBM World Wire supports using Stellar Lumens XLM and a stable U.S coin via their previous partnership with Stronghold. Mr. Lund also stated that the company is open to using other cryptocurrencies in future if they evolve to add the service into their docket such as Bitcoin and Ether.

There are many benefits to using a crypto enabled international money transfer system.

  1. Cost effective – according to the World Bank, cross border transfers usually cost an average of 7%, while that of banks is considerably higher around 11%. Online money transfers reduce the costs to 5.3%. Cryptocurrencies aim to eliminate banks completely which means that costs shall reduce even further.
  2. Security – blockchain’s decentralized system offers better security against a wide range of potential online attacks as opposed to centralized systems. The digital ledger and unique entries are impossible to duplicate and are also untraceable.
  3. Exposure – developing countries suffer the challenge of having a sizeable chunk of their population under banked or unbanked. However, mobile phone usage is more popular and as for the IBM project, part of their feature is payment messaging.
  4. Speed – traditionally, it is impossible to undertake an international money transfer instantaneously through bank services, especially if the amount is huge. Cryptocurrency solves this since it does not rely on location but provides real time transactions.

 

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