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IBM brings banking customers closer to cryptocurrency.
Announced Monday, six international banks signed letters of intent to issue stable coins, or tokens backed by fiat money, on World Wire, an IBM payment network using the Stellar public channel. The network promises regulated institutions to move value from one border to another – remittances or currencies – faster and cheaper than the old correspondent banking system.
Although only one of the banks has been identified – Philippine-based RCBC, which will issue a stable currency backed by its peso – the others, which will soon be named, will offer digital versions of the euro, the Indonesian rupiah, Korean won and Brazilian real, "Waiting for regulatory approvals and other exams," IBM said.
The network went live on Monday, but as banks wait for the blessing of their regulators, the only ticket available on World Wire at the moment is an already announced token, backed by a US dollar, created by Stronghold, a startup based in San Francisco. "We say" limited production, "said Jesse Lund, head of IBM's financial services blockchain, about the status of the project.
Indeed, while the Stronghold coin in US dollars currently serves as a ramp for US dollars, there are still no payment / payment points in the United States. In this regard, IBM has received "a favorable verbal response" from US regulators, Lund said.
"So we start with markets outside the US, but we will soon add the US as an operational endpoint. It will be some time this year; we'll get there, third quarter, fourth quarter, something like that, "he said.
Again, The World Wire platform has payment locations in 72 countries, with 48 currencies and 46 "banking terminals" (which include banks and fund issuers) where people can send or receive cash, IBM said.
In addition to issuing their own chips, this agreement gives banks the ability to use lumens, the native token of the stellar blockchain, which can serve as a "bridging currency" when it is difficult to trade a type of fiat against another. In addition, World Wire "could support other cryptos", but only supports the lumens at the moment as financial institutions are put off by the volatility of cryptocurrencies, Lund said.
However, when it comes to creating a stable universe based on a bank, Lund has a grandiose vision. He told CoinDesk,
"As more and more stalls come along, the notion of exchange changes over time. We are working very hard to expand the stable currency ecosystem, which will include many more banks and many more fiduciary currencies – such as digital representations of fiduciary currencies – and possibly even digital currencies issued by the central bank. "
Stellar performance
World Wire is perhaps the first major release for IBM and Stellar, but Big Blue has been working quietly for some time, as in pilot end 2017 KlickEx in the South Pacific region.
All this is part of the ideas of former banker Lund on how IBM will play its role in the future of financial services.
"We do a lot of other things in the authorized private area, which is a code for corporate blockchains," he said. "But it's a different type of system and a different type of network, and IBM calls it. I mean, it's something that IBM has never done before. "
Stellar, created by former Ripple co-founder Jed McCaleb, has made many daring moves on his own: what does IBM bring to the table?
Lund said that IBM was calling itself "the network operator" while Stellar was really the protocol level. In terms of IBM's role, this includes the maintenance of the payment API and some of the core software that manages the accounts and cash flows of network participants.
It also helps IBM maintain relationships with most banks around the world. Lund also pointed out that IBM is "the most reliable validator on the public Stellar network," which means that many other nodes listen to its nodes about the transactions that need to be done.
"Look at the Stellar dashboard and see the IBM validators," said Lund. "There are many more, but everyone trusts us. So, in the consensus model, we're a bit of a big anchor there. "
New revenue model
In addition to propelling Stellar and Stablecoins into the wheelhouse of many banks and regulators, IBM's blockchain division is also exploring a new revenue model with World Wire.
This is probably a sensible strategy, as the pressure on companies to at least show the possibility of a return on investment becomes palpable.
Indeed, an IBM spokesperson informed CoinDesk last week of the vendor's adoption of a pay-as-you-go model.
"In the next release of the IBM Blockchain Platform, we will move to hourly consumption-based pricing so that users have much more flexibility with respect to their costs and infrastructure when they build." a blockchain, "she said.
In keeping with this, World Wire is free to join; participants pay according to the value of their travel on the network, said Lund. This is how we are keeping our revenues in support of the network, so it's a whole new way of engaging with the financial services industry, which IBM had never done before. "
The global figures for global payments are pretty staggering, Lund noted, in hundreds of trillion dollars a year, doing cross-border transactions. As such, IBM intends to "measure the money" and "charge a very, very modest base point amount" on the value that runs through this frictionless pipeline, said Lund, concluding:
"I'm not talking about selling software here. I'm talking about transactional revenue related to the ownership of a new type of network made possible by the blockchain; these are new transactional networks. "
IBM image via nattul / Shutterstock.com
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