IBM Is Testing Cryptodollar Stablecoin on Stellar Network
IBM is exploring a cryptocurrency that is pegged to the US dollar and whether it would be a better option for making payments as compared to other virtual currencies that are highly volatile. IBM is a front-runner in using blockchain technology and using a digital ledger to help companies keep a record of their supply chain and make international transactions smoother.
Currently, IBM uses a crypto named Stellar Lumens for these activities. But now, IBM is going to test a U.S. backed stablecoin that works on the Stellar blockchain network. The stablecoin is named Stronghold USD after Stronghold, the fintech startup behind this project.
Bridget van Kralingen, IBM’s senior vice president of global industries, platforms and blockchain says
There’s this tremendous opportunity to make blockchain payments feasible, especially for cross-border.What is great about this is they are just basically digital dollars—digital fiat currency.
This is hoped to help cut down foreign exchange costs associated with international blockchain payments that up till now have required conversion from a government-issued fiat currency (for example the USD) to the Stellar cryptocurrency and then back to another fiat like the Indian Rupee. Using a stablecoin instead can help with the risk of a bad exchange rate when the money is converted back into fiat currency.
Van Kralingen adds,
We believe this experimentation with stablecoins can play a very big role in improving costs. I think if it can be done with the U.S. dollar, it can be done with almost any currency.
This shows that IBM is willing to work with other fiat backed stablecoins as well but Stronghold is its first venture in this space. While most other stablecoins are built on the Ethereum and Bitcoin network, Stronghold USD will be the first one built on the Stellar network. This should enable Stronghold USD to process hundreds of transactions/second which is way more than the other networks can handle. Van Kralingen also talks about the possibility of a ‘fed coin’.
Already, central banks are showing interest in using digital versions of government currencies.I think in the future you’ll see more.The way you’d settle FX today with Citi—I think you could do that with a stablecoin in the future.
Follow us on Telegram!