By Bill Taylor/Managing Editor
Well, well well. It sure didn’t take long for the innovators to begin building the proverbial better mousetrap, but in this case, a better cryptocurrency. Not content to wait for Bitcoin to settle down and become more mainstream, a new crypto startup called BASIS has attracted legendary billionaire Stanley Druckenmiller and Federal Reserve chair runner-up (participation trophy?) Kevin Warsh as investors. In effect, Basis will attempt to create a “new money”. Seems the main objection and key flaw to bitcoin is volatility and Basis aims to “fix” that.
One of the big selling points of Bitcoin is that there is a fixed supply so there can be no constant dilution as in fiat currencies. However, with a fixed supply comes a whole lot of volatility. Lots of buyers (demand) and price goes up, demand drops (or sellers show up) and the opposite happens……..price goes down. That makes Bitcoin hard to use as a means of payment, meaning one day a new car might cost $30k and the next day $40K or your salary paid in Bitcoin would fluctuate widely (and drive employers crazy). So, what to do?
Well, Basis is going to try and fix this “issue” (and make cryptocurrency useful) by setting a stable value (setting a pre-set fixed price) and increasing and shrinking supply. To quote Nadar Al-Naji, co-founder and CEO of Basis;
“It does it in a way that’s actually analogous to how central banks grow and shrink the money supply to also maintain price stability.”
We ran a story on FintekNews last week about three Princeton grads that got $133M to “re-invent” money, and here they are. Not as odd as it sounds when you get backing from Bain Capital Ventures, Alphabet’s GV venture capital are AND Mr Druckenmiller. Still, re-inventing money just sounds………..”over achieving”?
Who, or what, will control the supply? Will central banks not do the same? It just seems like a “digital Euro” with central control again. Oh well, I didn’t get $133M from really smart people.