Famous Tech Giant Uses Cryptos For Foreign Transactions

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Cryptocurrency Tech

Cryptocurrency continues to soar high on the different technological signs of progress it receives. The different cryptos making it big in the trade industry is a testament to the positive change we are seeing.

The overwhelming trust and confidence of big companies with the blockchain technology create an avenue for further developments.

Another boost on cryptocurrency is on its way as it gives light on cross-border transactions and payments. This is not just a bridge that would connect countries and business, but will also open another door for consumer satisfaction.

We know that it does not end here, but just a start for more promising advancements in the future.

IBM’s Stellar Move: Tech Giant Uses Cryptocurrency in Cross-Border Payments

Big Blue is making what could be considered its first public foray into cryptocurrency.

In the kind of unveiling that can only come before one of the biggest events in global finance, IBM is revealing today at Sibos 2017 the results of a partnership with blockchain startup Stellar in which it successfully settled real transactions using the company’s custom cryptocurrency, lumens.

While currently limited to cross-border payments involving British pounds and Fijian dollars, the early-stage platform is nonetheless designed to scale to handle seven fiat currencies in the South Pacific – including the Australian dollar, the New Zealand dollar and the Tonga pa’anga.

Perhaps the platform’s most distinguishing characteristic, however, is that the project showcases how private and public blockchain technologies are increasingly being used in tandem. While IBM’s blockchain solutions are designed to complete much of the workflow around transaction clearing, the actual settlement will be conducted using Stellar’s blockchain.

In this case, Stellar’s lumen serves to digitally connect fiat currencies, allowing for nearly instant exchange without the consumer or buyer ever touching the cryptocurrency itself.

Stellar founder Jed McCaleb told CoinDesk:

“When trading between multiple currencies, it helps to have a bridge currency to reduce the ledgers needed to maintain. Lumen provides that single ledger that can bridge currencies.”

New orbit

Taken together, however, this partnership goes beyond just technical implications.

Not only is the partnership an outside-the-box move for IBM, which has largely focused on its own blockchain platforms, it’s a big win for Stellar, which having emerged from the Ripple founding team hasn’t had quite the same growth, perhaps attributing in part to its focus on developing markets.

The partnership is also evidence of the extent of collaboration between blockchain firms and the wider financial world. To make the project work, IBM had help from partners including National Australia Bank, TD Bank and Wizdraw (HK) of WorldCom Finance.

The payments themselves are conducted for the Advancement of Pacific Financial Infrastructure for Inclusion (APFII), an organization of member financial institutions founded by the United Nations and Swift, and operated by KlickEx, a privately-held direct clearing provider that specializes in cross-border digital remittances.

According to IBM’s vice president of global blockchain development, Jesse Lund, getting all these players to work together is just an extension of IBM’s mission to collaborate with financial institutions to develop a blockchain ecosystem.

To that end, the platform is already integrated with IBM’s Financial Transaction Manager, which itself is integrated with ACH, SEPA and other electronic transaction networks. Going forward, APFII’s confirmation receipts are expected to be published as MT103 Swift messages directly to the blockchain.

“This in many ways is just an extension of that, wherein we’re providing, in collaboration with banks, and in the process developing this blockchain ecosystem,” said Lund.

More support

For now, the new project is also a balancing act – at once both a small advancement of early-stage technology and an aspirational advance toward more lofty goals.

While the trial with APFII has been ongoing since last week, the CEO of ClickEx, Robert Bell, said it’s too early to provide any numbers about transaction volume. But still, he expects as much as 60 percent of the cross-border retail market in the region to be transacting on the platform once all seven currencies are added (the Australian dollar will be the next currency integrated).

“For the first time, blockchain is being used in production to facilitate cross-border payments in multiple integrated currency corridors,” Bell said.

IBM also sees the demo as one with implications for the digitization of central bank money – a concept that’s gotten a significant amount of attention recently as central banks around the world grow more interested in figuring out how the technology could create efficiencies.

“Our long game is to support multiple different types of digital assets,” said Lund, adding:

“And I’m very confident that you will be seeing central banks coming forward with their own digital asset issuances that will be a much more formidable construct of this model.”

Today, that future will be discussed in greater detail on stage at Sibos in Toronto, where a panel with representatives from IBM, TD Bank and CLS will discuss the project with the CEOs of both Stellar and KlickEx.

“It’s going to be a wild ride,” Lund said, concluding:

“We’ve got the bankers and the renegades altogether.”

Via Coindesk


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