This release appeared today in CryptoCoinSpy, one of the trackers of the volatile industry, which has become an arena for wildly speculative trading and mostly bad news in 2018. The subject is a new blockchain based payments system called IBM Blockchain World Wire (which also appears on the IBM site). The underlying platform uses the Stellar network. One might not be too surprised that Stellar Lumen (XLM) has seen interesting pricing changes in the past couple of days.
‘Benefits of ‘Word Wire’ include faster payment processing (simultaneous clearing and settlement), lower costs, increased efficiency and simplified payment and asset type form of transaction. With 97% of the world’s largest banks as clients of IBM there remains little doubt that their new flagship payments system won’t be heavily advertised to their existing customer and client base.’
While we have yet to speak with anyone at either IBM or Stellar, one immediate logical question is how different is this payments network set up from a RippleNet (120+ banks), or the work being done through Ethereum (e.g.; SARB), permissioned approaches as well. One could assume that there is not much difference, other than perhaps the $100 billion in annual IBM revenues and relationships with lots of banks, providing a distribution advantage versus the blockchain startups (revenue unknown).
As those who follow the space are generally aware, banks are keeping their distance from cryptocurrencies given the lack of broad central bank consensus around legitimacy, in some cases banning them partially or fully (e.g.; China, India, Brazil). That is why any B2B payments growth using blockchain still involves fiat currency as assets and FX. The expectation is the forward thinking central banks such as MAS will legitimize a central bank digital currency (CBDC) in order to facilitate blockchain payments over time for the greater good. It is important to note that digital currency is an overriding term, and cryptocurrency is just one specialized form of digital money.
‘The importance of a CBDC on a blockchain network (and specifically on Stellar’s network) cannot be overstated. It would provide the legitimacy that the industry and blockchain technology has been generally lacking.’
We’ll keep you posted.
Overview by Steve Murphy, Director, Commerical and Enterprise Payments Advisory Service at Mercator Advisory Group