The stellar price rose by more than 100% on Monday following the announcement that the fintech platform was partnering with IBM and KlickEx to develop a blockchain-based cross-border payments solution.
Monday morning, IBM announced a blockchain-banking solution intended to help financial institutions process cross-border payments more efficiently, reducing both the cost and settlement time of transactions. The platform is being developed in partnership with fintech startup Stellar, as well as KlickEx, a cross-border payments system tailored for emerging markets.
“With the guidance of some of the world’s leading financial institutions, 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,” said Bridget van Kralingen, Senior Vice President of IBM Industry Platforms. “Making distributed ledger technologies more interoperable is the latest example of IBM’s leadership driving the rapid advancement of blockchain.”
IBM gives the hypothetical example of a Samoan farmer who will be able to use the platform to enter into a trade contract with a buyer based out of Indonesia. The blockchain will record data at every step of the transaction, from stipulating the terms of the contract to managing collateral and obtaining letters of credit to finalizing payment.
Stellar’s technology will serve as the “core backbone” for the solution, which IBM says is already processing live transactions in 12 “currency corridors” in Australia, New Zealand, the United Kingdom, and the Pacific Islands.
“Currently, cross-border payments take up to several days to clear,” said Stellar co-founder Jed McCaleb. “This new implementation is poised to affect a profound change in the South Pacific region, and once fully scaled by IBM and its banking partners, could potentially change the way money is moved around the world, helping to improve existing international transactions and advancing financial inclusion in developing nations.”
The announcement led the stellar price to an immediate surge. After beginning the day at $0.0177, the stellar price rose as high as $0.0491 in just six hours. Although it has since pulled back to $0.0355, this nevertheless represents a single-day increase of more than 97%. Stellar now has a market cap of $588 million.
However, although this announcement is bullish for stellar, it is unclear if the price boost will be permanent. In an interview with Fortune, Jesse Lund, IBM’s VP of Blockchain, stated that he believes the participating banks will only use Lumens — the native currency of the Stellar platform — temporarily because central banks will likely begin issuing digital currencies of their own in the near future.