IBM Common Stock (NYSE:IBM) has decided to support a new digital asset that will be pegged to the U.S. dollar. It will run on the blockchain network of Stellar (XLM). Created by fintech startup Stronghold, the new cryptocurrency is named after its creator as “Stronghold USD.”
Stablecoins are pegged to major currencies such as pound, US dollar, or Euro or to some precious assets like gold. Such stable coins have been favored by the cryptocurrency traders for trading instead of digital currencies that are highly volatile and unregulated. The biggest cryptocurrency Bitcoin (BTC) has now fallen by around 55% against the US dollar this year after rising above 1300% in 2017.
New digital asset to add stability to volatile crypto sector
As per the report, the recently released token has been issued using a price ratio of 1:1 with the American dollar. Importantly, it is the first of its kind stable-value digital asset project that is using Stellar blockchain network. According to the International Business Machines Corp and Stronghold, the two companies providing finance to this project, the new digital asset will add stability to the sector which is mostly considered highly volatile. Buyers interested in the new crypto coin will have to deposit greenbacks with the Nevada-based Prime Trust which is the partner bank of Stronghold. After that, Stronghold will issue tokens as per the decided 1:1 ratio.
The association between the Stellar network and IBM is not new. The New York-based American company started using the Stellar network for facilitating its cross-border payments in 2017. Reports suggest that the testing for the new stablecoin have already started. According to the vice president of IBM for global blockchain, Jesse Lune, “IBM will explore use cases with business networks that we have developed, as a user of the token. We see this as a way of bringing financial settlement into the transactional business network that we have been building.”
IBM believes new project present tremendous opportunity
Bridget van Kralingen, the senior vice president of IBM global industries, platforms, and blockchain stated that the new project offers a tremendous opportunity to the firm for streamlining the existing blockchain payment procedures carried across the borders. According to Kralingen, the stablecoin if used as digital, frictionless proxy for fiat currency has the ability to eliminate both these variables and thus can play a key role in the improvement of costs.