Basis, a “Stable” Cryptocurrency Startup Raises $133 Million

Last October Reuters published a news article about Basecoin, a cryptocurrency created by a Princeton graduate Nader Al-Naji’s firm, Intangible Labs. The idea behind the cryptocurrency was to create a crypto that people, including older people, would feel safe using for daily purchases and savings. Currently, most cryptocurrencies are used as financial investment assets whose fluctuation is based solely on market speculation. This, unfortunately, causes higher volatility in the market and is the reason most of the general public will not invest or consider them legitimate financial assets.

Intangible Labs recently renamed Basecoin to Basis, and with it announced that they have raised $133 million in investments from a large group of investors/investment funds. Some of the more notable investors were Bain Capital Ventures, Google Ventures, venture capital firm Andreessen Horowitz, and Lightspeed Foundation Capital. This is definitely good news for cryptocurrencies and the underlying technology, blockchain, as until recently very few members of the “traditional” financial industry were willing to invest in cryptocurrencies & cryptoassets.

The idea behind Basis which makes the cryptocurrency so promising is that it would be untethered to the speculative nature of the majority of cryptocurrencies (such as Bitcoin, Litecoin, Etherium, etc.). And, although there is another cryptocurrency startup aiming to achieve what Basis wishes to achieve, Tether, their idea is to link the value of their cryptocurrency to the rise and fall of the US Dollar’s value. Basis, on the other hand, aims to solve the problem of crypto-volatility by linking the rise and fall of Basis’ value to nothing, but enacting an algorithm that acts similarly to a country’s central bank. This means, in theory, that the blockchain-hosted algorithm would add more Basis to the market when there is a higher demand, devaluing the currency slightly to avoid inflation, while decreasing the supply of Basis on the market during times of decreased demand for the cryptocurrency. How the algorithm will manage to do this remains to be seen, but is definitely promising nonetheless.

Typically, a central bank deflates the value of the domestic currency by selling securities (to decrease the monetary supply) but, in this case, it is uncertain how Basis’ algorithm may achieve this without another financial tool in place. Maybe there is an element of the “central bank” algorithm they speak of that would achieve, in essence, what selling or buying back securities achieves on the market, but that remains a trade secret, for now.

The promise of a universal cryptocurrency that will be used by all, and is considered legitimate and non-volatile is closer to reality than we all may think. Additionally, the reaction of large capital investors and investment funds shows that they, too, see that the reality is closer to fruition than ever before, and they must jump on-board before they get left behind. Basis hopes to be released to the public in as short as 6 month’s time and up to 2 years. But, regardless, this is an interesting development in the cryptocurrency arena, and hopefully we will see some further developments from Intangible Labs soon.

The link to Basis’ whitepaper: http://www.basis.io/basis_whitepaper_en.pdf