The Immutable Marriage Between Stellar (XLM) and IBM: Top 3 Blockchain Takeaways to Know
As many of our readers are probably well aware of, just over 24 hours ago, IBM announced the launch of its World Wire global payments system.
From a technical standpoint, we can see that ‘World Wire’ makes use of Stellar’s native blockchain ecosystem and has been designed to help facilitate easier cross-border transactions for its clients. In addition to this, it is also worth adding that a total of “six international banking institutions” have signed letters of intent to establish their very own stablecoin offerings using IBM’s aforementioned system.
At press time, only two currencies can be used within the network— namely, Stellar Lumens (XLM) and Stronghold USD.
How Does World Wire Really Work?
While on paper the idea sounds excellent, how does IBM’s new remittance system really work?
The basic operational model for World-Wire is quite straightforward, so much so that, when making use of the platform, banks will have the ability to “transfer value to other entities in the form of digital currencies” instead of having to use traditional financial pathways such as SWIFT.
It should also be pointed out that World Wire’s operational model is quite similar to the one that has been employed by Ripple. However, the distinction lies in the fact that World Wire employees a “real-time market making function” when making a switch from fiat to alt-currencies.
Additionally, in relation to the matter, Stronghold CEO Tammy Camp pointed out some other benefits of IBM’s latest offering over Ripple’s xRapid and xCurrent platforms. These include the use of Stellar’s built-in currency market as well as a module that makes conversions between fiat and alt-assets faster and more streamlined.
Is Stellar Poised to Make a Huge Market Push?
In the wake of IBM’s latest product release, it appears as though Stellar’s native digital token ‘Lumens [XLM]’ is now destined for big things. For example, over the course of the past 24 hours or so, the currency has gained more than 5% value.
Some Key Advantages Of Using XLM Include:
- The currency can provide banks with the ability to “execute high-speed trades into and out of the digital token on either end”.
- XLM is designed in such a way that it can quite easily be used as a transfer medium on World Wire.
Other Key Takeaways Worth Considering
- As mentioned earlier, World Wire’s basic infrastructure is quite similar to that of Ripple’s. As a result of this, IBM now poses a great threat to the company’s future plans of dominating the global payments market.
- World Wire’s framework seems to “address certain niche’ issues” that Ripple hasn’t yet convincingly provided any solutions for— with one of them being ‘volatility’. To elaborate further on the matter, we can see that XRP has a “free-floating market value” which means that even minor market fluctuations have the potential to cost RippleNet users a lot of money.
- Lastly, from the looks of it, it appears as though World Wire will foreground fiat-backed stablecoins in a big way.
In closing out this piece, it should be pointed out that earlier this year, Ripple CEO Brad Garlinghouse tried to address some of the volatility issues that had been put forth by banks by saying that they were
“exposed to the same issues when using SWIFT-based transaction mechanisms”.
Anyhow, World Wire’s use of stablecoins (on a distributed-ledger) certainly looks to be gamechanger— especially since it combines a new level of speed and stability that has not been witnessed within this nascent market domain before.