If you own any Bitcoin, you’re probably in the habit of watching its price fluctuate wildly. What you aren’t doing is using your Bitcoin to buy things. It’s too valuable, not to mention unpredictable.
Enter Basis, a year-old, 10-person, Hoboken, N.J.-based cryptocurrency startup at work on a “stable coin” whose elastic supply will ostensibly expand and contract to keep its value at about a dollar instead of all over the map. The company’s big idea: to develop a new token that people will actually use, instead of use to speculate.
Investors apparently love what Basis is cooking up. The upstart is announcing today that it has raised a somewhat stunning $133 million in funding from Bain Capital Ventures, GV, longtime hedge fund manager Stan Druckenmiller, one-time Federal Reserve governor Kevin Warsh, Lightspeed Venture Partners, Foundation Capital, Andreessen Horowitz, WingVC, NFX Ventures, Valor Capital, Zhenfund, Ceyuan, Sky Capital, Digital Currency Group and others.
Reuters reported on part of the round last October, though CEO Nader Al-Naji, who cofounded the company with former Princeton classmates Lawrence Diao and Josh Chen, didn’t share specifics at the time on how much the company was in the process of raising.
Al-Naji continues to keep details close to the vest, declining in an interview yesterday to discuss when, exactly, Basis’s tokens will be in circulation. He also declined to share when he believes the token could see widespread adoption or to elaborate about the “major apps” with which Basis plans to integrate.
He did explain his love of Bitcoin, which started during his senior year at Princeton in 2012 when he managed to mine 22 Bitcoins. (“There was free electricity on campus,” he told us with a laugh.) It returned in 2016 when, as he readily admits, he noticed his Bitcoin’s value begin to soar.
The three founders, who worked at D. E. Shaw and Google out of school, also have their eye on three ways to get Basis adopted. They think the developing world is one target market, given that many of countries’ currencies are devaluing at a rate of 10 percent of more right now. (Bitcoin was intended to solve the problem of developing nations but its currency has proved too volatile for the task.)
They see Basis positioned well to take advantage of the large crowdfunding market, in part because if you’re crowdfunding for more than a few days, the prices of many currencies can move, which is not ideal, particularly if those currencies are moving in a line toward the ground.
Not last, they imagine that cryptocurrency exchanges that are currently dealing with all kinds of pricing gyrations will embrace Basis.
How it works isn’t crystal clear to us as of this writing, but when demand is rising, the system will create more Basis, and when demand is falling, the company will reduce Basis’s supply to create an increase in price. We gather from its white paper that early investors benefit off this supply and demand.
Basis is not the only company working to develop a stable cryptocurrency for people who want to use digital currency as easily as they do fiat currencies. A growing number of companies sees the opportunity that Basis has in its sights. (You can learn more about some of them here.)
Still, Al-Naji sees Basis playing a winner-takes-all game. “We do believe that one winner will capture the most of the mind share and create products and an ecosystem that uses its cryptocurrency, and we think once that foothold is in place,” it’s game over for other competitors, he suggests.
Certainly, the kind of backing it’s announcing looks to help toward that end. More details would help, too.
We’ll have a bit more on this story later this morning…