Fintech startup Stronghold has created a new stablecoin token dubbed the ‘Stronghold USD’ and it has received support from IBM. The token is launched on the Stellar network.
Stronghold is the first ever stablecoin to use the Stellar network and is reportedly backed by the US dollar at a 1:1 price ratio.
IBM and Stellar
IBM has been using the Stellar network since 2017 for cross-border payments and has now adopted the new stablecoin to enhance this process.
According to IBM’s senior vice president of global industries, platforms, and blockchain, Bridget van Kralingen, the new token represents a “tremendous opportunity” to improve blockchain payments currently undertaken by IBM.
IBM had been using Stellar’s native token, the Lumen (XLM) to facilitate fiat currencies by exchanging existing fiat’s into XLM for making transactions on the blockchain. One problem though is that this system is exposed both to intra-fiat exchange rates and volatile cryptocurrency rates.
However, using the Stronghold token eliminates the variables of the exchange rates and will play a big role in improving costs. This is because its worth remains stable no matter how the crypto market changes as it is backed by the dollar. Unlike regular cryptocurrencies which are backed by pure speculation as opposed to a tangible asset determining the price. These coins can be easily manipulated on a moment-by-moment basis by news or opinion.
Other Stablecoins
Van Kralingen also said that other stablecoin projects “pegged to national fiat currencies other than the U.S. dollar” would also be of value for IBM’s blockchain integration.
Malta-based Stasis only recently launched its own stablecoin backed by the euro on a 1:1 rate.
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Tether is also one of the more famous, albeit controversial, stablecoins on the market. It too claims to be backed by the US dollar at a 1:1 ratio.
Stablecoins have been gaining increasing traction as they may be one of the key ways to protect coins from the volatility of cryptocurrency markets. Price volatility is one of the major concerns for vendors about adopting these assets, as the value is forever changing.
Featured Image: Deposit Photos/Jaffarali
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