Cryptocurrency Project ‘Basis’ Raises $133 Million in Funding

Cryptocurrency
Cryptocurrency

 

Cryptocurrency Project ‘Basis’ Raises $133 Million in Funding

Basis, formerly Basecoin, has raised $133 million in a private placement, chief executive Nader Al-Naji revealed today. The Hoboken, N.J.-based project plans to create a stable cryptocurrency with an algorithmic central bank that will keep the price stable, something that has eluded cryptocurrency to date and limited its use as a reliable payment method.

Funding for the round comes from a diverse group of backers, including Bain Capital Ventures, GV, Stanley Druckenmiller, Kevin Warsh, Lightspeed, Foundation Capital, Andreessen Horowitz, Wing VC, NFX, Valor Capital, Zhenfund, INBlockchain, Ceyuan Ventures, Sky9 Capital and others. Warsh is a former U.S. Federal Reserve governor.

Tackling Volatility
Al-Naji, who co-founded the company with former Princeton classmates Lawrence Diao and Josh Chen, said volatility makes cryptocurrency hard to use for regular expenditures. If someone receives a salary of 1 BTC per month, for instance, they may not able to pay the rent if the price falls in value.

Bitcoin has proved to be as ineffective as hyperinflating local currency, making it a tool primarily for speculation.

Basis’ goal is to marry the benefits of cryptocurrency with centrally controlled fiat currency. Central banks mitigate volatility via monetary policy. They expand and contract the money supply. Cryptocurrencies, by contrast, have a fixed supply, which fosters volatility that makes them an unreliable form of payment.

Basis brings the benefits of cryptocurrency without the volatility, Al-Naji said. Newly created Basis will be distributed to those participating in the system, thereby decentralizing monetary expansion. Should it accomplish its goal, Basis will benefit the efficiency of developing nations’ economies, Al-Naji said.

Diverse Support
Basis, through its private placement, has gained the support of financial institutions such as crypto hedge funds and venture capitalists, in addition to crypto exchanges, application developers, blockchain wallets and economists.

The project’s founders see the developing world as one of its target markets, TechCrunch noted.

They also have their eyes on the crowdfunding market since that market will benefit from not having funds subjected to high volatility. They also think cryptocurrency exchanges will be attracted to a cryptocurrency not prone to pricing gyrations.

Al-Naji has not revealed a lot of specifics about how Basis will work, however, declining in an interview with TechCrunch to discuss Basis’s tokens will be introduced. Nor did he say when the token could see widespread adoption or to expand on the apps Basis will integrate with.

Also read: Hedge fund managers pounce on bitcoin volatility

Investor Affirms Benefits
A stable crypto store of value enables streamlined trading without incurring volatility risk, investor Salil Deshpande, managing director at Bain Capital Ventures, noted in another Medium blog. A stable coin could bring more accountability to the economies of developing nations.

It could also serve a global store of value and medium of exchange, initially in developing countries with unreliable central banks, then globally, Deshpande said. Economists have supported Basis’s thesis that extreme price fluctuations limit their mainstream appeal of cryptocurrencies as a place to store money long-term, according to Bloomberg.

Nevertheless, not everyone is sold on Basis. Preston Byrne, a blockchain consultant, criticized the concept, noting that Basis’ implementation has little in common with a central bank.

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