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IBM Collaborates with Stronghold to Create New Stellar Stablecoin
IBM is backing a new stablecoin, Stronghold, on the Stellar blockchain. The tech giant will be experimenting with using the stablecoin for some of its payment solutions.
Stronghold USD will be backed by US Dollars held by Prime Trust in FDIC insured bank accounts. Deposits will be split between banks to ensure each deposit is below the $250,000 limit on FDIC insured deposits.
Payment Solutions Without the Volatility
IBM’s larger remit for the stablecoin will be to develop solutions to help banks and institutions process payments quickly and securely using blockchain technology but in a manner which removes the inherent volatility of cryptocurrencies. It may also serve as potential peace of minds for customers in the knowledge that the coin is backed by US dollars and insured by the FDIC.
Jesse Lund, IBM’s head of blockchain services said, “What we really want to do is enable all sorts of digital transactional networks to settle their transactions with digital fiat currency on the same blockchain networks.”
If the project gathers traction, it will essentially amount to tokenization of fiat currencies, rather than the emergence of stablecoins. For clients, it will also eliminate the need to convert fiat to crypto and back to fiat again. If successful, we may see more use of tokenized fiat by banks around the world.
This is the latest in a series of collaborations between IBM and Stellar who are currently working together on several projects. The two have been working together since October 2017 to create cross-border payment solutions, and in May announced another venture to allow carbon credits to be traded on a blockchain. Many analysts believe that IBM and Stellar are together building a credible challenge to Ripple in the cross-border payment market.