International Business Machines (IBM) and Stronghold, the financial services company, are teaming up to back a new cryptocurrency that is tied to the U.S. dollar.
Reuters, citing the companies, reported that the digital token, dubbed Stronghold USD, launched earlier on Tuesday (July 17) on the Stellar blockchain platform. Buyers of the digital token deposit U.S. dollars with Prime Trust, Stronghold’s partner, and are issued the tokens on a 1-to-1 ratio. So-called stable coins, which are pegged to an asset, be it gold or currency, have been growing in popularity as companies try to expand the uses for cryptocurrencies. Bitcoin, the most famous of the digital tokens, has been volatile, trading at close to $20,000 last year and dropping around 55 percent since the start of this year.
According to Stronghold, the company’s USDs are aimed at businesses, multinational companies and asset managers. The tokens could be made available to retail investors in the next few months.
“The engineering work has been done on this token and we have seen a little bit of the early release of it,” Jesse Lund, IBM’s vice president of global blockchain, said in an interview with Reuters. “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.”
Lund told Reuters that as stable coins and blockchain become more mainstream merchants, consumers and suppliers will have access to cheaper, faster and safer alternatives to the current leading payment methods, which include cash, credit cards, debit cards and wire transfers. “The token allows folks to do payments [and] foreign exchange between companies in a very seamless and frictionless and more secure way,” Stronghold Founder and Chief Executive Tammy Camp added. “It enables people to be able to trade that token with other assets and other tokens as well.”