IBM has announced they will be taking an international payments platform out of beta. The new platform is being billed as Blockchain World Wire (BWW). IBM stated that the new platform, “Can simultaneously clear and settle cross-border payments in near real-time.” BWW appears to fit a similar niche to Ripple, and IBM expects it to be used primarily by large companies.
According to IBM’s website, BWW will facilitate, “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 digital asset facilitates the trade and supplies important settlement instructions.”
The fact that BWW proposes the use of a digital token is interesting. There is no reason why fiat currency couldn’t be transferred via blockchain, so this aspect of BWW could be evidence of a wider use-case scenario emerging for digital currencies. There doesn’t appear to be any digital token of choice so far, but IBM has been working on their own token.
IBM is locking in an early mover advantage
IBM’s BWW will reportedly plug into existing banking infrastructure, and record all transactions on a blockchain that is nearly impossible to corrupt. In IBM’s words, “All transaction details are recorded onto an immutable blockchain for clearing.” The two entities involved in the transaction will clear the actual trades, as they are probably going to be able to generate ample internal liquidity.
Many companies have proposed systems like BWW, but it appears that IBM is one of the first to bring a platform to the market. Earlier this year IBM’s head of blockchain services for financial institutions, Jesse Lund, commented on the company’s goals, “What we really want to do is enable all sorts of digital transactional networks to settle their transactions with digital fiat currency on the same blockchain networks.”
Not much in the way of competition
Other than Ripple, IBM is entering a market that is devoid of any serious competition in the West. Ripple had had no trouble cementing banking relationships in Japan, so IBM may have similar luck globally. The major question at this point is how willing financial institutions are to use a new system that involves digital assets as a means of settlement.
The fact that transfer will be nearly instantaneous will provide reassurance because institution won’t be exposed to any sort of volatility in the underlying instruments, even if a stable coin isn’t used. Ant Financial has already shown how popular a ‘bankless’ system can be at a consumer level, which may help institutions in the West adopt the new platform from Big Blue.
Nicholas Say was born in Ann Arbor, Michigan. He has traveled extensively, lived in Uruguay for many years, and currently resides in the Far East. His writing can be found all over the web, with special emphasis placed on realistic development, and the next generation of human technology.