IBM is taking its long-in-the-works blockchain-based payment system out of beta, with the launch of a new product called Blockchain World Wire.
Aimed at institutions and harnessing the stellar blockchain network, Big Blue says its new financial rail “can simultaneously clear and settle cross-border payments in near real-time.”
Similar to other blockchain-based payment networks such as Ripple, World Wire attempts to do away with banking intermediaries that add complexity and cost to the traditional international payments systems.
According to a document provided by IBM, the product works by substituting the banking intermediaries normally needed for cross-border payments with digital assets sent over a distributed network.
The company says on its website:
“Two financial institutions transacting together agree to use a stable coin, central bank digital currency or other digital asset as the bridge asset between any two fiat currencies. The digital asset facilitates the trade and supplies important settlement instructions.”
Effectively, using World Wire APIs plugged into banks’ existing systems, fiat currency is exchanged into a digital asset at bank A. It is then transmitted to bank B, where it is converted into a second fiat currency. “All transaction details are recorded onto an immutable blockchain for clearing,” says IBM.
As CoinDesk reported, IBM was in July revealed to be working with a startup called Stronghold on the launch of a low-volatility stablecoin that will run on the stellar blockchain and use its consensus mechanism to verify transactions.
“What we really want to do is enable all sorts of digital transactional networks to settle their transactions with digital fiat currency on the same blockchain networks,” said Jesse Lund, IBM’s head of blockchain services for financial institutions, at the time.
IBM plans to demo the product at the Sibos banking conference in October, according to a report.
With it’s move into blockchain payments, IBM will be competing with industry startup Ripple, which already offers several similar products aimed at institutions, such as xCurrent and xRapid, that have been seeing increasing usage globally.
A number of notable institutions are also working towards their own similar products, with GMO, Alibaba affiliate Ant Financial and others recently announcing moves in the space.
IBM has been working with the stellar project since last October, indicating in March that it is interested in expanding the business applications of cryptocurrencies.
Lund told CoinDesk at the time:
“What’s happening is there’s this emergence of a new segment that could actually be one of the biggest segments, that is a permissioned but public blockchain network typology.”
IBM image via Shutterstock