International Business Machines (IBM), a multinational tech company headquartered in Armonk, New York, revealed today that it is working with Stronghold, a blockchain startup backed by Freestyle Capital, to co-develop an FDIC-insured stablecoin pegged to the U.S. dollar and built on the Stellar blockchain.
— IBM Blockchain (@IBMBlockchain) July 17, 2018
According to the official announcement, the new stablecoin, which will be called Stronghold USD, will act both as a liquidity tool for exchanges and as a tool to enable banks to issue credit into transactional networks and trade ecosystems. Each Stronghold USD represents a claim on U.S. dollars deposited with Prime Trust, a Nevada-based partner bank that has also worked with Andreessen Horowitz-backed stablecoin, TrueUSD. This relationship ultimately provides a path for FDIC insurance on Stronghold USD’s underlying assets.
The partnership with IBM will primarily be centered around experiments with financial institutions and other corporate organizations to test Stronghold USD as a means of faster, safer and more efficient transaction processing.
Stronghold, which currently pegs itself as is the on-ramp and off-ramp to the Stellar Network, will use Stellar’s blockchain protocol to issue and transact Stronghold USD. Stellar is quickly becoming a popular blockchain platform for building digital assets, as its protocol can conduct 3,000 transactions per second with an average confirmation time of around 3-5 seconds.
In a statement accompanying the announcement, Jesse Lund, global vice president of IBM Blockchain, highlighted the potential of tokenizing real-world assets, especially in the financial sector.
The digitization of real-world assets using blockchain can dramatically transform many forms of financial transactions conducted around the world. New types of fiat-backed instruments, like Stronghold’s USD token, have the potential to improve the backbone of international banking operations and payments, giving banks an easier way to integrate with public blockchain networks without significant changes to their core banking and compliance infrastructure.
IBM is no stranger to the blockchain. The company is already actively developing and offering select blockchain-as-a-service products for its enterprise clients and even recently announced the launch of a new research center through a partnership with Columbia University to promote application development and education initiatives.
Disclaimer: This article’s author has cryptocurrency holdings that can be tracked here. This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments.