Without much of a hullabaloo, IBM is introducing “Blockchain World Wire”, which it refers to as “the new financial rail that can simultaneously clear and settle cross-border payments in near real-time.” The product is envisioned as a competitor to Ripple’s xRapid.
Blockchain World Wire, which is based on Stellar protocol, completes a cross-border payment using the following steps:
- “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 institutions use their existing payment systems – seamlessly connected to World Wire’s APIs – to convert the first fiat currency into the digital asset.”
- “World Wire then simultaneously converts the digital asset into the second fiat currency, completing the transaction.” (“All transaction details are recorded onto an immutable blockchain for clearing.”
The two images below illustrate how the system works:
According to IBM, Blockchain World Wire scores over traditional payment solutions with the following features:
- Faciliates Faster Payment Processing (through simultaneous clearing and settlement mechanism)
- Lower Transaction Costs (minimum capital requirements for cross-border transactions)
- Enhanced Efficiency (flat fee between all currencies)
- No restriction on payment size, asset type or destination
The product is not ready for launch yet. That may be the reason for not having an official announcement from either of the parties. Also, IBM has not revealed all the technical details other than saying that it uses Stellar’s technology, created by Jed McCaleb and Joyce Kim. Notably, before establishing Stellar in July 2014, McCaleb co-founded Ripple (along with Chris Larsen, in 2012) and guided the firm as its CTO until 2013.