The ongoing Brainstorm Tech Summit 2018 gave insights about the Stablecoin released by IBM on 17th July and the nuances of the effect of cryptocurrency in our markets.
Talking during the summit, Bridget van Kralingen, the Senior Vice President of IBM’s Global Industry platform spoke about how cryptocurrency tied with a stable fiat like the US dollar would only help in improving the payment scenario in existing markets. According to Kralingen, cryptocurrencies have three real-world applications. They are:
- Disruption of supply chain
- Disruption of payment
- The ability to secure identity and create greater security
She believes that blockchain technology and its applications can solve a lot of trust issues in the financial industries as the technology keeps security as a numero uno priority. Kralingen said that IBM has followed the cryptocurrency route because of the increased speed in transactions and the ability to reap over 40 percent advanced profits.
She has stated that because the Stablecoin is linked with the US dollar it makes it easier for banks to accept it as a form of transaction. Kralingen went on to say that banks would prefer to use cryptocurrencies like the Stablecoin rather than existing tokens such as XRP or Bitcoin, coins which have a lack of acceptance in the mainstream industry. She has conveyed her belief in cryptocurrency by acknowledging that massive adoption for the right cause should always be promoted. She backed this up by stating:
“There was this recent news that caught my eye where in Asia people conducted large scale cleaning processes around the three biggest rivers in Asia and collected all the plastic that polluted it. The collected plastic could be converted into ‘Plastic tokens’ and used for later transactions. An application like that is something that I look forward to.”
When asked about XRP being adopted by mainstream banks, she stated that banks would only adopt cryptocurrencies that were pegged with a stable fiat currency. According to Kralingen, this is the only way that conventional banks will include cryptocurrencies to its fold, whether the market is emerging or not.
Asheesh Birla, the Vice President of Product for Ripple disagreed with Kralingen’s comments that banks would fully leverage blockchain technology. He stated that blockchain is about decentralization and bringing in a system that would give the users more power during financial transactions. He remarked that cryptocurrencies work in the high octave in super regional banks and quoted the examples of Asian markets such as Japan and Philippines. He also believes that bringing in a cryptocurrency that is pegged to the US dollar works well in a bullish market where people can buy or sell at their will. He claimed:
“I didn’t learn much about economics in my undergrad but I know that during a bearish run, holders will have to buy lots of these coins to stay afloat. This will see the pegged currencies move back to the free market, in short, stable coins work best only in the small run.”
Claire Hughes Johnson, the Chief Operating Officer of Stripe had a few comments about IBM’s Stablecoin as well. She stated that Stablecoin is still a fiat currency because it is pegged to the US dollar and the reconciliation between fiat and cryptocurrency is a complicated process. She believes that in today’s fluctuating market, the marriage of Stablecoin with blockchain will not always work. Stripe is a technology company that allows individuals and enterprises to receive payments over the internet.
Asheesh Birla also commented that blockchain has to be decentralized and should not focus on permissible applications. He stated that cryptocurrencies coming into the market cannot compete with Stablecoins created by IBM and Oracle as they have a majority market share.
To a question regarding the future of blockchain, Claire responded by stating that the field of blockchain will catch up with mainstream industries and that anti-censorship movements will propagate this takeover.