The move by IBM to create cryptocurrencies could be one that kills Ripple. The news first broke through a Bloomberg report saying that IBM intended to create and issue cryptocurrencies for internal and remittance payments.
Ripple has always positioned itself as the future standard for all banking remittance payments. However, IBM’s World Wire, which is powered by Stellar’s blockchain, is seen as one of the Ripple competitors. The looming question is whether Ripple will become obsolete if banks start creating their blockchain solutions to facilitate instant payments.
According to Jesse Lund, the head of blockchain at IBM, JP Morgan’s controversial stable coin was the reasons behind the move. However, Lund did not reveal the identity of the two major US banks.
Banks Following JP Morgan’s Cryptocurrency Lead
In February, JP Morgan roused interest in the crypto industry when they launched their cryptocurrency. The JPM Coin is a stable currency linked to the value of the dollar. Its goal is to enable faster transactions in the bank’s payment network, reduce friction in international transfers, and transfer times.
Jesse Lund, the head of blockchain at IBM stated that they had received overwhelming interest from major banks after the announcement of JPM Coin. JP Morgan has kicked off a new movement in the blockchain industry for bank-issued currencies, which we wait to see if it is a good or bad move.
International Banks Interested In Partnering With IBM
The announcement by JP Morgan sparked a global interest and almost immediately, six banks reached out to IBM via letters of intent to use its blockchain network. These six banks will issue stablecoins pegged on their local fiat currencies.
Among the banks that have showed interest include Brazil’s Banco Bradesco, Philippines RCBC, South Korea’s Bank Busan, to name a few and an unnamed bank that will use the blockchain network to create and issue a stablecoin tied to the Euro.
Ripple’s 800-Pound Gorilla
Ripple has already run tests with hundreds of banks, and they have proven that their blockchain technology works. Following the news, the crypto community wonders why the banks did not choose Ripple but chose IBM to create cryptocurrencies. Ripple uses the XRP token to settle bank transfers and facilitate frictionless remittance payments.
The bottom line is that banks are not convinced that they can trust a cryptocurrency that they cannot control. Ripple’s 800-pound gorilla is that banks are not ready to give up control and that is why only a few banks are using the XRP token to settle payments.
According to Ripple CEO, Brad Garlinghouse, bank coins are not solving the existing problem, and they should use their fiat currencies instead of riding the cryptocurrency wave.
Stellar Will Oust Ripple
While IBM will dominate the headlines, the real champion to watch out for is Stellar. IBM’s World Wire network runs on the Stellar network, and it uses its lumens to settle some of the transactions. According to Lund, IBM has started with lumens, which are the native assets on the Stellar network.
However, Lund maintains they have the option of introducing other cryptocurrencies such as Bitcoin and Ethereum. Mind you, Jed McCaleb the man behind Stellar, is a former Ripple founder and their partnership with IBM to create cryptocurrencies is a blow to Ripple, which will see it lose value and footing in the crypto world.