These days blockchain-based startups are a dime a dozen. But when one of those startups is run by Jed McCaleb—who is famous for founding famous crypto-currency enterprises like Mt. Gox and Ripple—it’s worth paying attention.
On Wednesday, McCaleb’s most recent venture known as Stellar announced the launch of a new for-profit entity called Lightyear.io, which seeks to act as a global payments and currency exchange network with a focus on the developing world.
The new company, which will rely on Stellar’s open source blockchain software, could serve to transform the process of moving money around for business in developing countries, which lack access to secure and affordable transfer networks. Here’s how Stellar explained it in a blog post:
By using Stellar’s open protocol to provide interoperability between financial institutions and different payment networks, Lightyear.io will revolutionize cross currency and cross asset payments, making them faster, more efficient, and less costly. With Stellar’s open financial protocol, transactions are settled in almost real-time (3-5 seconds), for fractions of a cent, in a safe and secure network.
As my colleague Robert Hackett explained in December, Stellar—which operates as a non-profit—has already laid the groundwork for such a network through partnerships in the Philippines, India, and Africa.
The creation of Lightyear will now serve as the commercial arm of the endeavor, leaving the Stellar team to focus on improving the code that makes the system run. If you want to use an analogy, you can think of Lightyear like Red Hat, a company that’s built a successful business helping firms implement projects using open source Linux software.
Lightyear, of course, is hardly the first blockchain player trying to upend the money transfer business. Companies like Circle and Ripple have been working with financial institutions for years to try and create an “email of money” that reduces the time and settlement costs of transferring funds.
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The Stellar spinoff, though, has the pedigree to be considered a major contender in the fight to build an alternate payment network. In addition to McCaleb, Lightyear—which has been operating in stealth for the past few months—is also being led by ex-Palantir executive, Brit Yonge, and has the backing of the payment powerhouse, Stripe.
In an interview with Coins2Day, McCaleb explained that Stripe is supporting Lightyear in part because the new network could provide an easier way to sign up merchant customers in developing markets. He also said the developing world is fertile ground for adoption of blockchain networks, predicting it will be a “leapfrog technology” that allows users to skip implementing Western-style money transfer systems, and move straight to blockchain.
The Lightyear news may also serve to boost the digital currency tied to Stellar, known as Lumens. In recent months, these sort of digital currencies the (most famous of which is bitcoin) have been on a tear. As of Thursday morning, Lumens was the ninth most valuable of these currencies, with a market cap of around $281 million. Update: Indeed, by the end of Thursday, the price of Lumens had shot up 24%.