IBM, Stronghold Unite To Offer New USD-Pegged Cryptocurrency

International Business Machines Corp IBM has collaborated with Stronghold, a U.S based financial services institution. In a bid to support a new stable cryptocurrency, “Stronghold USD”, pegged to the U.S. dollar.

Stronghold was founded in 2017, and boasts of a trader base of more than 20,000. It is focused on developing an innovative worldwide payment and trade platform which involves doing away with the use of physical assets.

Stronghold individual users are enabled to receive, send and trade cryptocurrencies namely, Lumens, Bitcoin and Ethereum. Meanwhile, the institutions can avail Stronghold's U.S. Dollar payment and other trading facilities. The company’s cryptocurrency trade platform settles in U.S. Dollar and runs on Stellar network.

IBM’s blockchain tools will be leveraged by Stronghold, enabling both the parties to explore new opportunities in the financial ecosystem. IBM has previously supported the blockchain-based financial methods, comprising payments, wallets, insurance, among others. IBM’s involvement in this development is evident from its partnership with Stellar.org, back in October 2017.

We believe this partnership holds promise given the alluring prospects of blockchain in the financial technology space. Notably, IBM’s stock has gained 1.4% in the past year, underperforming against the industry’s rally of 4.8%.

Stronghold USD Token Features

Stronghold USD has been introduced on the “Stellar blockchain platform”. The stable coin is protected by Federal Deposit Insurance Corporation (“FDIC”), which differentiates it from the existing stable coin or other cryptocurrency providers.

Nevada-based, Prime Trust is the partner bank engaged in issuing the tokens. The buyers are required to deposit greenbacks in the partner bank. The tokens are pegged at “one-to-one U.S. dollars per coin” basis.

Stronghold USDs will enable business processes for financial institutions, asset managers, and multinational corporations, to mention a few. Moreover, the tokens are likely to be made available to retail customers,going forward.

The increasing popularity of blockchain and stable coins is expected to accelerate innovation in payment methods. Traders, consumers and the overall global suppliers will consequently avail cost-effective, faster and secure alternatives to credit cards, debit cards, cash and wire transfers.

The room for innovation in the blockchain backed cryptocurrency offerings is skyhigh. We believe the collaboration is a win-win situation for both the parties. IBM is anticipated to gain blockchain capabilities by venturing deeper into the development. Meanwhile, Stronghold is expected to upscale its operations and gain more traders under its scanner.

Revolutionizing Financial Methods with Blockchain

Blockchain is the technology that allows cryptocurrencies to exist as it tracks transactions relating to digital assets. However, it can also track documents which make it especially alluring to those in the banking, finance and insurance industries.

Blockchain powered financial technology holds promise. It is projected to empower traders with reduced total cost of ownership, faster and secured transactions. Per MarketsandMarkets data, the FinTech blockchain market is envisioned to surge at a CAGR of a whopping 75.9% to reach $6.23 billion by 2023 from $0.37 billion in 2018.

We believe IBM is well poised to grab the projected growth opportunity of the blockchain industry with its widespread presence in the relevant market.

IBM’s Other Blockchain Initiatives

IBM’s initiatives in the blockchain space need no introduction. The company is currently a dominant player in the blockchain market, which is touted as the next game-changer in the technology sector. Moreover, per Juniper Research, IBM is placed above Microsoft Corporation MSFT and Accenture ACN in blockchain-related advancements.

Blockchain has steadily gained a major part of the IBM’s product offerings. Notably, the company is apart of more than 50 active blockchain networks.

Recently, IBM also entered into a partnership with Columbia University in a bid to promote research skills pertaining to this space. The Columbia-IBM Center for Blockchain and Transparency will provide the interested students with access to the company’s internships and other joint research initiatives.

To Conclude

IBM’s increasing initiatives in the blockchain industry position it well to gain from the significant growth prospects the space offers. Moreover, the tech giant continues to bring innovation to services to help the enterprises, government agencies, leverage the emerging technologies, including the likes of cloud, Artificial Intelligence (“AI”), Internet of Things (“IoT”), among others.

IBM’s advanced capabilities makes its offerings well poised to gain robust adoption. The traction witnessed by the company’s services will bolster the top line going ahead.

Zacks Rank & Key Pick

IBM currently carries a Zacks Rank #3 (Hold).

A better-ranked stock in the broader technology sector is Micron MU, sporting Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The projected long-term earnings growth rate for Micron is 8.2%.

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