IBM and Stellar Lumens (Stellar) have just announced the ‘Blockchain World Wire’, a cross-border payment system, which is expected to compete with Ripple’s/XRP’s xRapid.
Tech giant IBM has been working on a number of retail and enterprise solutions in the blockchain space, and it has just finalised a cross-border payment solution known as the Blockchain World Wire, to be powered by the Stellar blockchain platform. This is some of the first news that has come of the partnership, which was first reported on in October 2017.
How the system works
In an official announcement, IBM explained how the product works, stating that it uses digital assets over the blockchain, a distributed ledger network, replacing banking intermediaries required to enable cross-broader payments. The tech giant also claims that the new payment system outclasses traditional payment systems when it comes to efficiency, transaction costs, and payment speed.
The system involves integration of the ‘World Wire’ API into the existing payment systems of banks. So when making a cross-border payment, a bank will convert fiat into a digital asset and then send it to another bank, which will then convert the digital asset into respective fiat currency of the associated country. The company explains that:
Two financial institutions transacting together agree to use a stable coin, central bank digital currency or other digital assets as the bridge asset between any two fiat currencies. The digital asset facilitates the trade and supplies important settlement instructions.
Competition with Ripple/XRP heating up
The Blockchain World Wire project is certainly a contender to Ripple’s/XRP’s xRapid project, which is also aimed at facilitating cross-border payments. It’s worth to mention that the technologies behind both Ripple/XRP and Stellar were created by Jed McCleb, who was serving as the Chief Technology Officer at Ripple before leaving for Stellar.
Whereas Stellar has only secured one major partner (IBM) for cross-border payments, and reports suggested executives from Facebook had met with Stellar to discuss its technology last month, Ripple has made immense strides, partnering with the likes of Western Union, Cambridge Global Payments, and MoneyGram, whom have all been testing the xRapid system.
Stellar to see more long term gains?
Generally, Stellar is down nearly 75% from a high of £0.71 ($0.91) back in January. But with the news that the Blockchain World Wire about to launch, the cryptocurrency has already seen some incredible gains in the last 24 hours, rising by 3.09%, to trade at £0.18 ($0.228). If IBM and Stellar continue to find more potential partners to come on board and trial their cross-border payment solution, Stellar might see more gains in the future given that its existence in the cryptocurrency space has been much shorter than Ripple’s/XRP’s.