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IBM And Stronghold Launch Dollar-backed Cryptocurrency

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Launch Dollar-backed Cryptocurrency

IBM is partnering with financial tech company Stronghold to launch a cryptocurrency backed by the U.S. dollar. The Stronghold USD cryptocurrency is a stable coin as it’s pegged to a government-backed currency.

According to Stronghold CTO, Sean Bennett, “Stable coins can provide seamless access to all currencies, improving the global movement of money.”

Through this partnership, IBM will explore how blockchain technology can improve payment processing.

“Stronghold USD is a new type of digital instrument that provides the foundation for transforming real-time domestic and international payments, backed by the U.S. dollar. This is the next milestone in IBM’s support of the token economy,” stated an IBM spokesperson.

Additionally, Bennett says, “The process for seamlessly managing and trading assets of any form, from digital to traditional currencies, needs to evolve as financial institutions are seeking ways to break into new asset classes like cryptocurrencies.”

The crypto coin will also use the Stellar Network’s blockchain and it’s insured by Prime Trust, a blockchain-focused asset management company.

Stronghold USD

Furthermoer, the cryptocurrency is currently available in its Private Beta mode. The qualifications for established businesses looking to invest in digital assets, or pay for transactions, includes a monthly volume of $50k or more, and also compliance with regulations (if applicable).

Stable Coins

The cryptocurrency market has a characterization of being volatile and also lacking transparency. Additionally, prominent currencies lose value almost overnight and many ICOs are turning out to be elaborate scams involving millions of dollars. In such a market, a currency backed by real assets provides more assurance to the investor. In term of benefits, blockchain makes it possible to transact in minutes instead of days and weeks. The scalable Stellar blockchain will enable Stronghold to add more fiat currencies in the future.

However, stable coins are not free from scams. The claim of having fiat backing may be empty. It may have no actual framework to ensure that each coin receives backing by a currency. Moreover, the currency backing the token is also important. The USD is by far the currency most widely in use for foreign exchange globally.

The market capitalization for the top 100 cryptocurrencies is currently over $294 billion. This is a significant drop from where the market was at the beginning of the year. Bitcoin, current market cap over $125 billion, has seen a steep fall in its position since the end of 2017.

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