Cryptocurrency Startup Basis Garners $133 Million in Seed Funding
Cryptocurrency startup Basis is less than a year old, but it has already managed to secure over $130 million USD from some of Silicon Valley’s top investors. Contributors to the initial funding round include GV (formerly Google Ventures), Bain Capital Ventures, Lightspeed Venture Partners, and Sky9 Capital.
A Stable Coin Could Attract Broader Crypto Adoption
Basis is headed by its cofounder and CEO Nader Al Naji. He’s seeking to create a stable currency of the same name that some analysts feel has the potential to replace money in the future. The entity is slated to maintain a fixed value, and is thus less vulnerable to speculation and, potentially, better suited for making payments for goods and services than competitors like bitcoin.
“The price volatility of cryptocurrencies is one of their biggest barriers to widespread adoption,” Al Naji wrote in a Medium post.
The startup is based out of Hoboken, New Jersey. Its founding team hails from Princeton University, all of whom graduated summa cum laude with degrees in computer science and related fields. Executive members include CTO Brian Freyburger, general counsel Susan Sidd, and chief of staff Dionne Gordon.
It does face some ensuing competition. Dubai-based Freedium, a stable coin, is set to launch later this year. And the Swiss-based Saga is also set to create a non-volatile currency it hopes will compete with the controversial Tether (USDT) and Dai.
Volatility Is a Huge Problem
One of the main issues with cryptocurrencies today is that they are not backed by mechanisms (i.e. banks, etc.) that work to keep them stable. As a result, they are often “victims” of dramatic price swings and value fluctuations. By contrast, physical currencies are governed by central banking systems that enforce strict monetary policies to manage volatility, and expand or contract money supply as needed. Thus, consumers can use these currencies for standard purchases knowing that their values will not change dramatically overnight.
Basis will be backed by what Al Naji calls an “algorithmic central bank,” which will “simulate inflation and deflation to control the price,” much like any real currency in today’s financial infrastructure. For now, Basis’ target markets will be developing nations that suffer persistent bouts of fiat currency volatility. Eventually, Al Naji hopes Basis can be used to issue things like loans, contracts, and even workers’ salaries.
Ambition from Day One
Executives began seeking financial backing for Basis as early as last year, when it was only a few months old and going by the name Basecoin. Prior to its initial funding round, the company had managed to secure donations from the New York-based Digital Currency Group to pre-sell the token.
“We have found a way to keep the price of the coin stable, while keeping all other great features of cryptocurrency,” Al Naji commented last October.
For more information on Basis, check out the company’s white paper.
Will we see more stable currencies in the future? Sound off in the comments section below.
Images via Quinn Dombrowski at Flickr, Pixabay