With payment technology’s development, an American MNC IBM and a network of banks have started utilizing digital currency and blockchain software to initialize the blockchain banking across multiple countries. IBM and Stellar both will work together to move money across the borders right through the South Pacific.
IBM recently announced this move on Monday through which the merchants and consumers can send money to another country in a real-time and it would certainly accelerate the payment process which usually takes days.
The blockchain network contains 12 currency corridors that cover New Zealand, Austalia, Fiji, and Tonga. By the early next year in the South Pacific’s retail foreign exchange corridors, it will apparently process up to 60% of all cross-border payments.
Blockchain, which is based on a disparate network of the computer to build an indelible, tamper-proof record of latest transactions, is popularly associated with a decentralized digital currency called bitcoin (BTC). Though, it can be used in several other apps such as tracking shipments or for the documentation of a series of banking transactions cross-border.
IBM stated an example of blockchain that soon a farmer in Samoa will be able to contract with a purchaser in Indonesia. And blockchain will be used to record the whole thing from the farmer’s collateral to letters of credit to pay.
IBM’s VP of Blockchain, Jesse Lund told that it is an essential next step in the evolution of blockchain technology.
Digital Currency is The Key: The fresh blockchain banking process is significant as the banks firstly will depend on bitcoin like digital currency called Lumes to ease the payments made across multiple countries.
Presently, the banks manage such payments by keeping foreign accounts in a local currency and then debit the accounts as needed, this process is very slow.
Under the latest blockchain system, banks will make the transactions using digital currency Lumens and then depend on the local market makers for the conversation of Lumens into local fiat currency. The fresh digital currency Lumens are created by a well-established figure in the world of payments and crypto-currency – Stellar.
IBM and Stellar both are working together on a project named Hyperledger Fabric under which they are developing open source blockchain tools to assist payment infrastructures.
According to IBM’s VP of Blockchain, the banks will use stellar’s digital currency for a temporary period as it is quite predictable that in the upcoming year, central banks will also start issuing their own digital currencies and that these will become a vital part of blockchain-based money transfers.
Carolyn is a technology graduate and loves to write about anything related to technology as well as writes in others sectors. Carolyn is a professional writer with over 7 years of experience. Initially starting off as a programmer, Carolyn decided to combine her knowledge about technology and writing and that’s how she joined Reporter Expert.