IBM has officially announced their creation of a new blockchain geared at speeding up cross-border payments: Blockchain World Wire. International Business Machines Corporation (IBM) is an American technology company with headquarters located in Armonk, NY. IBM has operations in upwards of 170 countries around the globe.
IBM’s new blockchain platform will allow banks to clear and settle payments around the world almost instantly. To create this remarkable new blockchain platform, IBM has partnered with international banks such as Bank Danamon of Indonesia, National Australia Bank, BBVA of Spain, and more. Additionally, they teamed up with blockchain non-profit, Stellar, and currency exchange service, KlickEx for development.
The efforts of this blockchain are to increase efficiency and transparency in banking transactions and allow for real-time banking, even in the world’s most remote areas.
Blockchain World Wire: Banking on Blockchain
Blockchain World Wire has been in the works for quite some time. IBM has looked to blockchain technology as their banking solution because it eliminates the need for intermediaries. Banking intermediaries add additional steps, challenge points, and costs to the banking model. As such, Blockchain World Wire intends to replace traditional banking intermediaries with the digital assets of the decentralized blockchain.
The appeal of blockchain is that it is immutable, permanent, fully transparent, and entirely decentralized. As such, these qualities are attractive in comparison to traditional banking models as they eliminate the possibility of human error, tampering, and fraud. Additionally, blockchain places ownership back in the hands of the individual rather than the institution.
How Does World Wire Work?
Firstly, it is important to understand the meaning of a fiat currency. A fiat currency is a government-approved, legal currency. With this in mind, here is how World Wire works.
Blockchain Word Wire utilizes banks’ existing systems. Bank A will exchange a fiat currency into a digital currency. Next, Bank A will transfer the digital currency to Bank B. Lastly, Bank B will then convert the digital funds into a different fiat currency. No matter the distance between Bank A and B, the steps will be conducted in real-time. Therefore, if funds are being transferred from the US to Canada, for example, the US bank involved will exchange USD for digital assets and transfer the digital funds to the involved Canadian bank where the digital funds will be exchanged to Canadian Dollars. It’s that simple.
IBM’s blockchain development has the potential to change the way money is transferred worldwide. As such, transparent, decentralized banking may become the way of the future. In fact, it appears a number of other banking giants are eager to follow IBM’s lead. Baking on blockchain has just become all the more accessible.