There is a new major player in the cryptocurrency market. IBM recently joined forces with a financial technology company called Stronghold. Together they are promoting a fledgling cryptocurrency pegged against the U.S. dollar.
Big Blue is throwing its considerable weight and influence behind this “stablecoin.” These digital tokens are tied to currencies that already exist and the government backs. It cuts down on the usual virtual currency volatility.
Stronghold USD is the name of the new IBM-promoted crypto. The Federal Deposit Insurance Corporation (FDIC) insures the U.S. dollars, per IBM. The tech giant keeps its associated reserves in an asset manager Prime Trust that concentrates its efforts on blockchain assets.
IBM announced that it is experimenting with these so-called virtual greenbacks to investigate ways to help financial institutions like banks to process daily payments with greater security, efficiency, and speed. Meanwhile, Big Blue believes that the stable coins will diminish the volatility plaguing the cryptos market.
The other relevant example of tying a crypto to the U.S. dollar has not inspired investors so far though. Investors accused Tether of propping up the bitcoin prices in 2017’s dramatic run up in the price.
Tether has gained a hotly debated reputation in the world of cryptos because of investor fears on the status of its U.S. dollars they hold in reserve. Many fear that Tether Limited, the parent corporation of the tether coins, is not keeping sufficient dollars to honestly back up the tokens that circulate.
This is not stopping IBM though. The technology and computing behemoth argued that the Stronghold stablecoin will depend on a Stellar-based platform. Former Ripple exec Jed McCaleb designed this in 2014.
Not Their First Venture
This is not Big Blue’s first effort in the world of cryptocurrencies. They joined forces with an environmental technology micro-firm Veridium earlier in the year. This allows users to transfer their carbon credits to digital tokens. This firm similarly relies on blockchain developed by Stellar and its lumen digital tokens to make possible swifter payments within a consortium of financial institutions.
IBM is aggressively pursuing the cryptocurrency market. This has transformed into a $270 billion force according to CoinMarketCap, the industry insider site. The market has suffered from a substantial pullback from the beginning of 2018. Many blame Bitcoin, which fell dramatically so far this year from last year’s near $20,000 price to less than $7,000 yesterday.