IBM Testing USD-Backed Cryptocurrency
IBM, the leading provider of enterprise blockchain solutions, is considering using a cryptocurrency pegged to the US dollar; otherwise known as a “stablecoin.”
IBM currently uses a cryptocurrency known as Stellar Lumens as a conduit for international payments. Now, IBM aims to test their so-called “crypto dollar,” which runs on the Stellar blockchain. The coin is called Stronghold USD, and is named after the fintech startup behind the project, Stronghold.
Stablecoins are extremely important for future growth within the industry. They allow participants to utilize the beneficial properties of cryptocurrencies whilst avoiding price volatility.
Bridget van Kralingen – IBM’s Senior Vice President of Global Industries, Platforms and Blockchain – commented on the company’s future use of a stable, digital currency:
“There’s this tremendous opportunity to make blockchain payments feasible, especially for cross-border,” van Kralingen stated. “What is great about this is they are just basically digital dollars—digital fiat currency.”
Ultimately, using a stablecoin as a proxy for fiat currency could significantly reduce the risk of inaccurate exchange rates, as the price of digital currencies such as Stellar Lumens can be extremely volatile.
According to van Kralingen, central banks are showing interest in using digitized versions of fiat currency. Moreover, she believes that stablecoins could pave the way for a “Fed Coin,” as well as greater usage of cryptocurrency by banks more broadly. “I think in the future you’ll see more,” said van Kralingen. “The way you’d settle FX today with Citi—I think you could do that with a stablecoin in the future.”