IBM Blockchain World Wire — A Bridge between Fiat and Crypto Currencies

By IndraStra Global News Team

By IndraStra Global News Team

On March 18, 2019, IBM announced the launch of IBM Blockchain World Wire, a real-time, single unified global payments network (which integrates payment messaging, clearing and settlement) to support cross-border transactions and foreign exchange in more than 50 countries using a variety of digital assets for settlement, also known as cryptocurrencies or "stable coins." In October 2017, IBM announced a pilot of World Wire, but as of today, the network is officially accessible "in a growing number of markets."

"We've created a new type of payment network designed to accelerate remittances and transform cross-border payments to facilitate the movement of money in countries that need it most," said Marie Wieck, General Manager, IBM Blockchain. "By creating a network where financial institutions support multiple digital assets, we expect to spur innovation and improve financial inclusion worldwide."

Infographic Attribute: Comparison between current international payment system and IBM Blockchain World Wire / Source: How IBM Blockchain World Wire revolutionizes cross-border payments  (Infographic, PDF)

IBM Blockchain World Wire is using "Stellar Protocol"  — an open-source, decentralized protocol for digital currency to fiat currency transfer  — through which it has enabled point-to-point payment locations in 72 countries, with 47 currencies and 44 banking endpoints. Local regulations will continue to guide activation, and according to IBM, they are actively growing their global network with additional financial institutions. According to Stanley Yong, CTO of IBM Blockchain for Finance, the first live transaction on the network took place March 8.

Infographic Attribute: IBM Blockchain World Wire - Stellar Protocol / Source: How IBM Blockchain World Wire revolutionizes cross-border payments  (Infographic, PDF)

The network is already using Stellar Lumens (XLM) and a U.S. dollar stable coin for the settlement through IBM's previously-announced collaboration with Stronghold. With the announcement of IBM Blockchain World Wire, Stellar Lumens’ (XLM) price has rocketed by 5%; XLM/BTC which was skirting along 0.00002700 BTC has increased to 0.00002850 in less than 2 hours.

Pending regulatory approvals and other reviews, six international banks, including Banco Bradesco, Bank Busan, and Rizal Commercial Banking Corporation (RCBC) - the rest, which are soon to be named, have signed letters of intent (LoIs) to issue their own fiat backed stable coins on World Wire, adding Euro, Indonesian Rupiah, Philippine Peso, Korean Won and Brazilian Real stable coins to the network.

With banks coming onboard, stable coins are actually going to have a regulatory agency in place, because the issuer of the asset is, in this case, a regulated financial services entity (i.e., the value of the stable coin is actually backed by deposits held at a banking institution). So by comparison, the value of the fiat-backed stable coin (such as FDIC insured USD stable coin) will at all times mirror the value of fiat currencies (such as the US dollar) — directly curbing the mind-boggling volatility in the exchange rate of the cryptocurrencies witnessed last year.  

NOTE: According to Jesse Lund, VP Blockchain and Digital Currencies, "IBM Blockchain World Wire could support other cryptos but is only supporting lumens for the moment because financial institutions are put off by the volatility of cryptocurrencies. It intends to add more digital assets based on client demand and participants on the network."