By Bill Taylor, Contributor
An IBM fiat currency? Well NO, but the waters are getting murky as to what exactly is a fiat currency and a “stablecoin”.
If you are unfamiliar with the term “stablecoin”, it is a cryptocurrency pegged to the U.S. dollar which, I imagine, could also be based on other fiat currencies as well. Now where does Big Blue (IBM) enter this picture? Well, IBM is partnering on an initiative with a startup company called Stronghold to launch a “stablecoin” dubbed USD Anchor. The Anchor token will be backed one-for-one with US dollars and will run on the Steller blockchain which will verify transactions. BUT the big twist is that the Anchor token’s dollar assets will be held at Prime Trust (a Nevada-chartered trust company) which will then deposit the cash at banks that are FDIC (Federal Deposit Insurance Corp) insured. This is distinctly different from Tether (another “stablecoin”), which is also backed by dollars, too, BUT no one seems to really know where those dollars are held (kind of an issue). The Anchor tokens being held in FDIC banks offer protection guarantees and, of course, can be audited.
Obviously that transparency enabled IBM to safely partner with Stronghold on the venture and Big Blue will explore multiple use cases for the token with its financial institutional clients. According to an IBM spokesman,
“What we really want to do is enable all sorts of digital transactional networks to settle their transactions with digital fiat currency on the same blockchain networks.”
Stronghold will kind of be the “anchor” and will be in charge of issuing the digital asset tokens and making sure all the funds (dollars) are properly deposited.
The “stablecoin” allows speedier transactions and a much lower transaction cost while increasing transparency. Additionally for IBM, the “stablecoin” is only the first step on a long path leading to multiple digital currencies while also expanding IBM’s partnership with Steller announced last October. So, where could this “copy-cat” fiat currency Anchor token go? IBM “envisions a network that has multiple different asset classes living on it (blockchain). You could have digital euros, digital dollars, digital pounds” which could radically change the foreign exchange market. Think FX real-time transactions.
The globe is changing and it’s nice to see Big Blue helping to lead the charge.
Bill Taylor is Managing Partner at Fintek Capital & a frequent contributor to FintekNews