SIMBA Chain is supporting Stellar in our next release. You may ask, why? Well first, let’s look at some of the legacy technologies we are currently using that are inefficient and cumbersome.

If you’ve ever wired money from a bank to another bank in another country, you know there is literally no visibility and the path it takes from your bank to your intended recipient’s bank is anything but efficient. You probably noticed something that says SWIFT? Anything but, right? SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication, founded in Brussels in 1973 it provides a network that enables financial institutions worldwide to send and receive information about financial institutions in a secure, standardized and reliable environment. Standardizing on ISO 9362, which has banking identifier codes and banking telecommunication messages. Much like EDI (Electronic Data Interchange) for supply chains, which I’ll get into later.

So the problem is in exactly how it aims to solve a consensus of funds, a shared ledger. SWIFT does not facilitate funds transfer, but it rather sends payments orders which must be settled by correspondent accounts that the institutions have with each other. So each institution, in order to exchange banking transactions, must have a banking relationship by either being a bank or affiliating itself with one or more in order to have that benefit of doing business. So when I decided to wire some money, it literally took a month, why did it take a month? I filled out the bank wire transfer at the bank, verified accounts were all correct and the name of the recipient was correct. Waited a few days, called the recipient, “Did you receive the funds?”, answer, “No.” I call the bank, I ask, “can you trace it?”, “sorry all we have is the IMAD and OMAD.” “The what and the what?” (IMAD/OMAD means Input/Output Message Accountability Data and it is a mandatory unique number given to each FedWire payment when using the Federal Reserve Bank Service, and can be used to investigate and track wire transfers.) So that’s great, but this doesn’t help for going across the boarder and tracking it in a different country and the bank it’s going to. Also come to find out, the money transferred from my local bank to another bank to another bank then finally to my recipient’s bank in the other country who had the right banking relationship to verify funds. Ok so you’re thinking, there’s a dozen apps to make this easier and why don’t just send crypto? There is another dozen currencies to transfer funds, right? The point was, just trying to do a simple business transactions was not so simple. After going back and forth, come to find out the name of the recipient was keyed in wrong, and it was rejected by the recipient bank. The account was correct and all the information I filled out was correct, but it was just keyed in wrong by one of the many hops the money took throughout the process. Also, if I could have had visibility and access I would have known what the issue is right away. Enter Stellar

The Stellar network is a distributed blockchain based ledger and database that facilitates cross-asset transfers of value, including payments. The native digital asset of Stellar is called Lumens (XLM). Stellar can also support other tokenized assets on its blockchain. So you can use fiat currency to transfer funds to another currency, or use Stellar’s native currency, Lumens. This is interesting because, a bank could use their own bank coin to be the intermediary currency when transferring US dollars to Euros. There is a couple other interesting elements that Stellar has to offer: anchors and operations. Anchors, are partnerships within the Stellar network that can do federation and be a single account holder, essential an interface for their account holders to use the stellar network without having to have individual wallets for their users. Also, if banks support one currency and to transfers they have to support all currencies which is very difficult, hence why my original transfer took so many hops, with Stellar you can have on institution instantly transfer into their fiat currency. Transactions in Stellar are made up of a list of standard operations. Operations are an individual command that mutates the ledger. Picture below from Stellar shows an example of a payment.

Stellar Infrastructure

Now let’s combine a great payment network like Stellar with a private permissioned Ethereum network for supply chain. Imagine a trailer manufacturer in the Midwest trying to buy wood in bulk from a new supplier in south east Asia. Millions of dollars at stake, and letters of credit are involved and it is very difficult for the trailer manufacturer’s local bank to manage the transfer. The key is to tie the digital money transfer with the physical good and the communication that coincides in real-time. Many manufactures rely on EDI(electronic data interchange), which consists of business information using a standardized format and a process which allows one company to send information to another company electronically rather than with paper. Business entities conducting business electronically are called trading partners. But once again, this data is making multiple hops just like the banks that have the right relationships setup. There really is no reason why the Customer and Supplier should be using a 3rd party if they truly trust each other, what can streamline this process is using a network like a private permissioned Ethereum network where the consortium of Customers and Suppliers have their own nodes to come to a consensus. Purchase Orders, Invoices, Advanced Shipment Notices, Bill of Ladings, etc. can all be transacted in real-time and payments verified via a public payment network like Stellar. The killer blockchain solution isn’t a single blockchain, but a combination of multiple blockchains. Having a single API to read/write is highly important that’s why at SIMBA we’re developing the next generation of APIs to enable users, enterprises, and governments to build these blockchain solutions.