International Business Machines Corp. (NYSE: IBM)
For decades IBM was the industry leader in all things computing. However, IBM’s focus on business applications meant that it declined in prominence as personal computer companies came to dominate the industry.
IBM has maintained their niche as a technology company focused on business computing solutions, and has now added cryptocurrency as another product designed specifically to meet their clients’ needs.
Cryptocurrency for Transactions
While investors may enjoy the meteoric rise of cryptocurrency prices and traders the high degree of volatility, these factors are actually a drawback when it comes to using cryptocurrencies for actual exchanges.
Many cryptocurrencies also have long wait times and high transaction costs for each exchange, which further reduce their viability as a means of exchange.
This is why IBM has focused on producing a blockchain-based solution for company-to-company transactions. Their latest result is a cryptocurrency that is tied to the value of the US dollar, so that users can expect low price volatility and predictable changes in the value of the cryptocurrency.
Stronghold USD for Business Transactions
IBM has dubbed their new cryptocurrency Stronghold USD, and it is what industry insiders refer to as a ‘stablecoin’.
This form of peer-to-peer transaction fails to maintain the decentralized ledger that is at the core of the original cryptocurrencies, instead relying on the reputation of IBM as a fair and impartial regulator and arbiter.
Companies can use Stronghold USD to monitor transactions for everything from materials to finished products, and exchanges can be made reliably without the need for a constant settling of accounts in terms of traditional currencies.
Tether and Other Stablecoins
Stablecoins are not just an attraction for businesses though.
Many cryptocurrency experts believe that stablecoins represent one of the great frontiers in crytpocurrencies, and is a lucrative sector worth potential billions in profits to the company or companies that get it right.
There are still very few people who use cryptocurrencies for actual transactions when compared to the number of people who use it as a store of value, but this could change dramatically if a consumer-based stablecoin was established.
Some industry insiders argue that Tether represents the first true stablecoin meant for consumer use, and its daily transaction values rival those of Bitcoin itself. However, it has so far failed to make inroads into the population at large.
The problem with these stablecoins is that they give up some of their decentralized nature to achieve the kind of price stability that modern consumers expect from a currency.
This is why IBM’s foray into stablecoins is so exciting for many cryptocurrency enthusiasts, since they have the potential to overcome these objections and technical issues involved with current stablecoins and produce a cryptocurrency that is used widely in transactions by businesses and consumers alike.
Beyond Business Computing
For IBM to take their business-based stablecoin knowledge and apply it to a consumer cryptocurrency would mean that they have decided to step outside their well-established market niche as a provider of technology solutions for companies.
However, the enormous potential of a consumer-focused transactional cryptocurrency might just be the draw needed for IBM to break its well-established mold.
If the lessons from the development of Stronghold USD and other business-focused stablecoins can be easily applied to the world of consumer transactions, then IBM stands to make billions from the use of their already-proven cryptocurrency technology.
This kind of temptation might be too much to resist, even for a company as set in its ways as IBM.
IBM and the Future of Stablecoins
While IBM’s latest stablecoin has many cryptocurrency enthusiasts and investors excited at the prospects, only time will tell if the technology can be properly adapted to consumer transactions and if IBM will be the company to lead the way.
However, the latest unveiling of Stronghold USD demonstrates that the cryptocurrency frontier is constantly moving forward, and new and exciting applications for blockchain technology are just starting to emerge from the development process of long-established technology insiders such as IBM.
It is likely that many more massive technology companies will begin rolling out their own versions of and applications for cryptocurrency and blockchain technologies, and they all have the potential to be as disruptive to the status quo as this new crop of stablecoins.