A cryptocurrency venture from three Princeton graduates has captured the attention of Silicon Valley. On Wednesday, the New Jersey-based cryptocurrency startup Basis announced it had raised $133 million in a round backed by venture capital firms including GV (formerly Google Ventures), Bain Capital, Lightspeed Venture Partners, Andreessen Horowitz, and Sky Capital.
The team behind Basis is designing a "stable" cryptocurrency that they say will maintain a fixed value, and thus be better suited for making purchases. That's in contrast to Bitcoin and other popular cryptocurrencies, whose wild price swings up and down make it undesirable as a day-to-day replacement for traditional money.
"Cryptocurrencies aren't currencies...the price volatility of cryptocurrencies is one of their biggest barriers to widespread adoption," Basis co-founder and CEO Nader Al-Naji wrote in a Medium post announcing the funding.
Al-Naji points out that cryptocurrencies are now used almost exclusively as a means of speculation, rather than a way to make actual purchases. The company says that it's making a digital token that's backed by "an algorithmic central bank" which, they say, will simulate inflation and deflation to control the price, "just like a real currency."
A spokesperson for the company told Business Insider that Basis's chief market is in the developing world, where even traditional currencies typically experience stretches of volatility. The company believes that in the future, its tokens could be used to pay for anything from job salaries to loans to contracts.
Reportedly, Basis has been courting venture interest as early as last year, at a time when it was known as Basecoin. An October 2017 report by Reuters said that the company, which was then only a few months old, had received funding from New York-based Digital Currency Group to presell its token.
At the time, Al-Naji hinted at the coin's potential to Reuters, stating that his company had found "a way to keep the [coin's] price stable while keeping all the other great features of cryptocurrencies."
Basis isn't the only cryptocurrency startup that's hoping to create a stable token that can be used to buy things —the controversial Tether, for example, bases its value on the US dollar, intended to keep the price steady. However, Basis believes that its focus on the developing world will help make it a key part of the financial system.
"By providing anyone with an internet connection access to a stable and secure medium of exchange for the first time, we believe Basis can significantly increase the efficiency of the economies of developing nations," wrote Al-Naji on Wednesday.
