Despite the recent fallout in the cryptocurrency industry, the domain holds its credibility among industrial biggies and public entities. In a recent breakthrough, IBM, one of the world’s largest companies decided to take its banking partners a little more close to the world of cryptocurrency.
It announced on Monday that it is planning to loop in six international banks to back their plan. These banks have signed a letter to issue stablecoins or tokens, backed by fiat currency, on World Wire, an IBM payment network. Incidentally, the World Wire uses the Stellar public blockchain.
The main aim of the network is to move the remittances or foreign exchange across borders more quickly and cheap. The system has gone live on Monday, even though the banks are waiting to get their regulator’s approval. The only stablecoin that is running on World-Wire is a US-based dollar-backed token created by Stronghold. The latter is a start-up from San Francisco. Meanwhile, IBM revealed that it would be looping in Philippines-based RCBC, Brazil’s Banco Bradesco, and Bank Busan of South Korea.
Aside from using its own tokens, the arrangement opens up the possibility of banking using lumens, the native symbol of the Stellar blockchain, which can be used as “bridge currency” when the transaction becomes difficult because of various fiat currencies.
IBM’s head of blockchain for financial services, Jesse Lund said,
So we are starting with markets that are outside of the U.S., but it won’t be long before we add the U.S. as an operating endpoint. It will be sometime this year; we will get to it, third quarter, fourth quarter something like that.
It needs to be mentioned here that the World Wire has payment locations in 72 countries, 48 currencies, and 46 banking endpoints. These endpoints also include banks and money transmitters where people can exchange cash.
A crypto-based revenue model
Stellar and Stablecoins are just one side of the story that IBM is revealing openly. Very few, however, know that they are working on a revenue model with World-Wire. Industrial experts believe that this is a smart move since pressure on enterprise players to showcase a possibility of ROI is becoming palpable.
Explaining the ‘pay-as-you-go’ model, IBM said,
In the next version of IBM Blockchain Platform, we will be moving to an hourly charge based on consumption, so that users have much more flexibility over their costs and infrastructure as they build blockchain.
The World-Wire is free to join. Participants just need to pay according to the value they move through the network. Lund further explained how this revenue-generating model works well for the World Wire, saying,
That’s how we maintain our revenue for supporting the network and so that alone is an entirely new way of engaging the financial services industry that IBM has never done before.