IBM has teamed up with financial technology start-up Stronghold on a cryptocurrency that will’s pegged to the U.S. dollar.
The tech giant has put its weight behind a so-called “stablecoin,” a digital token that will, in principle, can be tied to an existing government-backed currency, in order to reduce the volatility associated with virtual currencies.
In This kind of case, the cryptocurrency, called “Stronghold USD,” can be backed by Federal Deposit Insurance Corporation-insured U.S. dollars, IBM said Tuesday, with reserves being held by blockchain-focused asset manager Prime Trust.
IBM said This kind of will experiment with the virtual greenback to explore ways of helping banks in addition to also additional financial institutions process payments faster in addition to also more securely. The aim of stablecoins can be to reduce the volatility that will can be commonplace inside the cryptocurrency market.
although This kind of follows much controversy surrounding a well-known stablecoin known as tether, which has been accused of being used to prop-up the cost of bitcoin during last year’s spike in value.
Tether can be also a contentious subject inside the cryptocurrency world due to concerns surrounding its U.S. dollar reserves. The fear can be that will Tether Limited, the company behind the tether coin, does not hold enough dollars to account for the number of tokens in circulation.