IBM backs stable coin with Stronghold
IBM is partnering with Stronghold, a San Francisco-based financial services company, backing a cryptocurrency pegged to the US dollar introducing what many hope could be a so-called stable coin and thus taking volatility out of the cryptocurrency ride.
Stable coins are pegged to stable assets such as gold or the US dollar, which in the case of the Stronghold coin is backed by the latter. The Stronghold USD, launched on Tuesday on Stellar blockchain platform is the first and only venture-backed USD Anchor on the Stellar Network.
Anyone wanting to purchase the coin can deposit dollars with partner bank, Nevada-based Prime Trust, which is FDIC insured, and Stronghold will issue tokens based on a 1-to-1 ratio. Stronghold is a financial institution building a global payment and trade ecosystem.
The company plans to use Stellar’s blockchain protocol to issue and transact the stable coin with access to liquidity through its institutional exchange services and the custodial relationship with Prime Trust.
Collaborating with Big Blue
The company says its new partnership with IBM will explore uses for its Stronghold USD within blockchain business networks on IBM Blockchain Platform. Stable coins are garnering much more attention of late and are seen in the first instance as an answer to the inherent volatility of bitcoin and other alt-coins.
According to Stronghold, “the unique attributes of such tokens harness the promise of cryptocurrencies, while also limiting price volatility, adhering to the rigors and integrity of sound monetary policy, and providing support for industries that have regulatory compliance requirements.”
IBM also highlights the potential of such collaboration as global vice president, Jesse Lund noted digitisation of real-world assets using blockchain can dramatically transform many forms of financial transactions conducted around the world.
He added: “New types of fiat-backed instruments, like Stronghold’s USD token, have the potential to improve the backbone of international banking operations and payments, giving banks an easier way to integrate with public blockchain networks without significant changes to their core banking and compliance infrastructure.”