The risks associated with digital currencies, coupled with their volatility, is what forms just the right fodder for speculators. It is what keeps the industry psyched up to a point that a single currency like Bitcoin can create so much buzz online. However, a group of Wall Street fixtures and Silicon Valley venture capitalists do not seem to be impressed with this trend and are now plotting to come up with a cryptocurrency that is set to be boring by design.
Algorithmic Central Bank Idea
The concept dubbed Basis is set to cause disruption in the way cryptocurrencies are designed to work. The forces behind this idea hope to come up with an “algorithmic central bank” that will derive its inspiration from economic principles that power fiat currency to help minimize swings and adjust supply. According to Nader Al-Naji, a co-founder, the cryptocurrency in question has been designed just like any other digital asset, albeit without the volatility that is synonymous with most cryptocurrencies. He believes that this volatility is what has led to poor adoption of most of them.
Off to a Good Start?
On Wednesday, Basis reported that it had sold $133 million courtesy of a pre-sale coin offering to the venture capital arms of Brian Capital and Alphabet Inc. as well as Lightspeed and Foundation Capital. Notably, there were other worthy investors in the list that included Kevin Warsh, a former US. Federal reserve governor and Stanley Druckenmiller, a famous hedge fund manager.
Support and Criticism in Equal Measure
The concept of Basis has received quite a significant amount of support from economists who agree to the fact that the frequent unpredictable fluctuation of prices noted in the current cryptocurrencies has hindered their appeal to notable investors, who are looking to find an ideal place to store their money for the long term. For instance, Bitcoin went through a rollercoaster ride last year, rising to trade at an all-time high of about $20,000 before it dipped drastically from the start of this year to trade at under $7,000.
However, Basis is not without its critics; there have been many notable figures opposed to the idea. One of these is blockchain consultant Preston Byrne, who describes this as “the worst idea in cryptocurrency”. He argues that the startup seem to be over-promising in terms of it potential when in reality, its implementation does not seem to have much in common with a central bank.
What do you think about plans to introduce the Basis concept? Will this idea revolutionize cryptocurrency or just is it just another lame duck? Let us know your views in the comments section below.