We all know very well that international transactions take days (or weeks!) to be authorized and have a high cost. However, now IBM wants to fix these problems just by reducing the compensation time to just a few seconds, increasing transparency and decreasing the number of intermediaries through its first Blockchain-Powered international payments network.
IBM Just Unveiled Its First Blockchain-Powered International Payments Network
Earlier what was the theory, is now becoming practical. One of the many blockchain applications is to streamline international transactions – and IBM has announced an initiative that does just that. The company has closed several partnerships to help develop and spread the use of technology.
Usually, international transactions take days (or weeks!) To be authorized and have a high cost. The purpose here is to fix these problems by reducing the compensation time to just a few seconds, increasing transparency and decreasing the number of intermediaries.
The initiative uses IBM’s blockchain platform in partnership with two area companies, such as Stellar.org, which specializes in blockchain networks, and KlickEx, which will serve as the financial institution makes the blockchain bridge with banks, stores consumers.
As we all know that, blockchain works as a distributed database system that records all transactions on the network. Information is recorded in blocks that can not be erased or tampered with; several people need to validate each transaction, which is also encrypted.
In IBM’s solution, the practice is the same. Once registered, transactions are unchanged and agreements are made by smart contracts, which are also based on the blockchain. In this way, it is possible to deal with several different currencies without losing safety or compensation time. All parties have access to the transactions and can participate in the validation process.
The system is already processing transactions with 12 different currency conversions in the Pacific Islands, Australia, New Zealand and the UK. The region was chosen because of the relatively low volume of financial operations, which carries less risk if something goes wrong.
Because the blockchain has these characteristics of being a decentralized system and with a differentiated validation process, bank transactions between countries can (and need to!) Be more efficient. Bitcoin itself makes international transfers from scratch with zero bureaucracy or waiting time.
However, the IBM project is not intended to bid farewell to traditional banks. On the contrary, the company has partnered with several institutions around the world, such as Canada’s TD Bank, Japanese giant Sumitomo Mitsui and other banks in the Philippines, Indonesia, and Hong Kong. The blockchain would be used here only to store and manage financial information and transactions, not to anonymize them, even to help spread usage and not raise suspicion.
“IBM’s new network may enable a farmer in Samoa (Country in Oceania) to make a deal with a buyer in Indonesia. The blockchain would be used to record contract terms, manage trade documentation, allow the farmer to provide a guarantee, get letters of credit, and finalize the transaction with immediate payment,” exemplifies IBM with its new system.
The company expects this blockchain to stimulate financial transactions around the world, regardless of payment type and value. So, what do you think about this? Simply share your views and thoughts in the comment section below.