Ripple’s xRapid to face competition from IBM and Stellar [XLM]’s newest offering?

IBM announced earlier today that they will be launching a new service for cross-border payments known as World Wire. However, what has got the cryptocurrency space aflame is that it utilizes the Stellar Protocol, thus pointing to a huge use-case for the network.

On the official website of the product, they stated:

“Using blockchain technology and the Stellar protocol, IBM Blockchain World Wire makes it possible for financial institutions to clear and settle cross-border payments in seconds.”

Moreover, they spoke about how World Wire works, with the description stating that two financial institutions would agree to use a bridge asset between two fiat currencies. The asset could be a stable coin, central bank digital asset, or “other digital asset”.

The fiat currency to be sent would be converted into a digital asset, with the receiving side “simultaneously converting” the digital asset into the receiving fiat currency.

It boasts of features such as simultaneous clearing and settlement, elimination of multiple parties that process traditional cross-border transactions and reduced capital requirements for conducting the transactions. They also said that the system would “support payments of any size, to any destination, in any asset type”.

They stated:

“The solution uses digital assets to settle transactions — serving as an agreed-upon store of value exchanged between parties — as well as integrating payment instruction messages.”

IBM claims that around 97% of the world’s largest banks are a part of their client network, with over 90% of all credit card transactions globally occurring through their systems.

While this is bullish news for XLM HODLers, many familiar with the cryptocurrency space will recognize this as being similar to Ripple’s xRapid technology. xRapid settles cross-border transactions by utilizing XRP as a bridge currency and also provides faster settlement than existing solutions by a large margin.

The technology also aims to reduce the cost of capital for cross-border transactions by removing the need for pre-funded liquidity in the form of nostro and vostro accounts.

However, the way that xRapid sources liquidity is different from the way World Wire seems to do. While xRapid sources liquidity from exchanges listing XRP and trading it with fiat, World Wire has a variety of options for doing so. This includes FinTech companies, banks, central banks, or the cryptocurrency itself.

Moreover, the Stellar network utilizes a method known as pathfinding, where liquidity can be sourced without having a direct pair between the fiat currency being sent and received and Lumens or any of the other solutions for liquidity.

The launch of IBM’s product, therefore, can be seen as a direct competition to what Ripple is trying to achieve with xRapid. They target the same market, use similar technology, and aim to solve the same problem: cross-border payments.

User bellyburpcough on Reddit said:

“It really is incredible looking at IBM’s dominance in banking and the extraordinary effort they are making in blockchain payment systems with Stellar as an integral partner. This relationship is far more advanced than any other between a major bank technology provider and a blockchain protocol. Big first mover advantage.”

The post Ripple’s xRapid to face competition from IBM and Stellar [XLM]’s newest offering? appeared first on AMBCrypto.

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