Six years ago, Nader Al-Naji was mining Bitcoin in his dorm room at Princeton University. He still owns the 22 Bitcoins he mined in college.
But today, Al-Naji is the cofounder and CEO of Intangible Labs, whose forthcoming product Basis (formerly known as Basecoin), is a cryptocurrency designed to do just the opposite of what Bitcoin has done: The price of a Basis coin is meant to stay at $1.
Earlier this week, Basis announced that it had raised $133 million from venture capital investors to develop Basis, its so-called stable-coin, a cryptocurrency whose price is algorithmically pegged to a fixed value, adjusting its supply based on demand.
The Bitcoin price, meanwhile, is hovering around $8,200; in the past year, Bitcoin has fluctuated from as low as $1,200 to as high as roughly $20,000. “Our thesis is that the volatility of cryptocurrencies is actually largely blocking mainstream adoption,” Al-Naji said on Coins2Day’s latest episode of Balancing the Ledger, a weekly show about blockchain technology and fintech cohosted by Robert Hackett and Jen Wieczner. “If you look at something like Bitcoin or one of these other cryptocurrencies, while they’re useful for speculation, you’d never want to, for example, do a loan or a salary in these cryptocurrencies.”
On the other hand, Al-Naji is still “bullish” on Bitcoin, which is why he is holding on (or “hodling,” in industry lingo) to most of his coins. He notes that well-known venture capitalist Tim Draper, of Draper Fisher Jurvetson, last week predicted that the Bitcoin price would hit $250,000 in the next four years. Paradoxically, that makes Al-Naji see an even greater need for a stablecoin like Basis, which does not have any of the same return potential.
“I get a little heart attack every time I have to spend my Bitcoin,” Al-Naji said. With Basis, though, he doesn’t have to worry that what he shells out today on say, a sandwich, could have bought him say, a Ferrari tomorrow (or a year from now) if he’d held on to it. “I think the fact that the value is stable and not expected to appreciate really solves almost a perverse incentive with spending it that makes it much more useful as a medium of exchange,” he said.