IBM has partnered with a Polynesian payments system provider and an open-source FinTech payment network to implement a new international exchange based on a blockchain electronic ledger.
The new payment network uses IBM's Blockchain Platform, a cloud service, to enable the electronic exchange of 12 different currencies across Pacific Islands as well as Australia, New Zealand and the United Kingdom.
KlickEx Group, a United Nations-funded, Pacific-region financial services company, and Stellar.org, a nonprofit organization that supports an open-source blockchain network for financial services, are backing the new cross-border payments service.
Payments made and received through KlickEx transfer between bank accounts in the Pacific Islands and Australia, New Zealand and Europe; the service also enables consumers in developing nations to transfer funds directly to mobile wallets.
What is blockchain?
Blockchain is a public electronic ledger – similar to a relational database – that can be openly shared among disparate users to create an unchangeable record of their transactions, each one time-stamped and linked to the previous one. It can also be used as a private electronic ledger.
Each digital record or transaction in the thread is called a block (hence the name), and it allows either an open or controlled set of users to participate in the electronic ledger. Each block is linked to a specific participant.
Blockchain can only be updated by consensus between participants in the system, and when new data is entered, it can never be erased. The blockchain contains a true and verifiable record of each and every transaction ever made in the system.
Financial services (see Bitcoin) was the first industry to jump on board the blockchain wagon.
The new IBM-based service is designed to improve efficiency and reduce the cost of making global payments for business and consumers, and for Klickex and Stellar.org, developing nations.
Participants in the Pacific region blockchain exchange include Bank Danamon Indonesia, Bank Madiri, Bank Negra Indonesia, Bank Permata, Bank Rakyat Indonesia, Mizuho Financial Group, National Australia Bank, TD Bank, and Wizdraw of WorldCom Finance. The institutions will collaborate to help expand the distributed ledger's use in other regions around the world, IBM said.
"In the future, this IBM universal blockchain payment solution is positioned to support central bank-issued digital currencies, securities, bonds and structured financial assets as well," IBM said in a statement. "IBM is working to explore new ways to make payment networks more efficient, and transparent so that banking can happen in real-time, even in the most remote parts of the world."