Name: Balancing The Ledger: Stable Coin Basis, New York Attorney General Probe, Coinbase, and Pornhub
Uploaded: 2018-04-20
Duration: 9 min 53 s
Description: Nader Al-Naji, cofounder and CEO of Basis, a stable cryptocurrency whose price doesn’t fluctuate like Bitcoin, joins The Ledger team to talk crypto.

[ MUSIC ] Welcome to balancing the ledger where finance and tech intersect. I'm Jenn Viechner. I'm Robert Hackett. And today we're here will Nadar Al'nadji, who's the CEO of Of Basis, formerly known as Basecoin. Nadir, thank you so much for being here. Thank you so much for having me. So, today I wanted to start off by talking about one of the biggest deals we've seen in a while, which was Coinbase which is the largest US bitcoin exchange buying earn for a rumored price $ 100 million. Nadir, what do you think the strategy of this is? What's the logic behind it? Well Balaji Srinivasan, the CEO of Earn is an amazing technologist. And so obviously is incredibly strategic for them get someone like that. But beyond that what's interesting about Earn is they're really one of the first companies that created utility component cryptocurrency as opposed to just a speculative one. Which is what we've mostly seen today. And then, and what's interesting is I, I'm actually an Earn. com user. So I've you know, I allow people to massage me and stuff like that. I'm a platform using BitCoin. And so I think it's really marking a big move towards utility. Which also basises is involved with. I think this is a key acquisition for Coinbase. You know they're basically going to try and get Coinbit currency into the hands of more people. And this is a great mechanism to do this. [ UNKNOWN ], he's created this company that basically disperses cryptocurrency out to people for completing tasks. Whether it's responding to an email or filling out a survey from a company. I see it kind of like AOL handing out CD- roms to get people online. It's going to be very key to bringing more people into the cryptocurrency universe. So speaking of exchanges, we also saw the New York Attorney General this week sent these letters to 13 different BitCoin exchanges in New York. That's something that people are pretty concerned about. We saw Jesse Powell, the CEO of Kraken, another BitCoin exchange that left New York a couple years ago Saying that new York is actually hostile to Crypto, and that this is going to push the industry away from this city, just when it's starting to developing. Jessie's voicing a concern that we've heard a lot from BitCoin entrepreneurs, which is that New York is very overbearing when it comes to regulations. The Big license that they've had for Netflix for years. Exactly, that's a great example. And New York is home, it's the financial capital of the world. Wall Street is here, so they're not gonna let cryptocurrency come in and just disrupt it willy nilly. They're gonna take this very seriously and put a lot of regulations down. We're seeing that happen. I think the regulators both at the federal and the local level Are really working to try and figure out the right balance right now between investor protection and stifling innovation right, and I think what we're seeing is that it's difficult to figure out where exactly that balance is. The SEC actually has two mandates right, it's It's investor protection but also capital formation. And so the investor protections are there for a reason, you know, they're there to make sure that people who are offering legitimately, you know, aren't confused with people who are complete frauds. And so regulations have the big benefit of essentially legitimizing the space as far as I see it. And that's good for you company, as well as, you know, to kinda divide the legitimate companies from the more, you know maybe scamming ones. Absolutely, well, as a company that's working really really hard to be complient, it's obviously good for us that the rules are actually clearly outlined, and also enforced. Let's talk about your company bases formerly known as BaseCoin. You just raised $ 133 million this week from investors like [ UNKNOWN ] Horowitz and a bunch of others. Tell us a little bit about what bases does. Right. So what bases is if you look at Crypto currencies today [ UNKNOWN ] is that the volatility of Crypto currencies It's actually largely blocking mainstream adoption. The reason for this is if you look at something that is volatile, 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. For example, imagine if your salary was denominated in BitCoin, like one BitCoin per month. If it goes down, then you might not be able to pay rent. If it goes up, an employer might think you're being paid too much. You have good months and bad months. [ LAUGH ] For sure, for sure. [ LAUGH ] What basis is really trying to do is bring all of the benefits of cryptocurrency, the indepdence and accessibility, which are two fo the really big benefits But without that volatility and the way that we do that is is we take BitCoin which is a block chain, and what BitCoin really did was a big technical innovation where it essentially made it possible to run a database with a set of rules where nobody can really modify those rules, and for that reason it's very independent and accessible to anyone with an internet connection. With Basis, what we do is we take those rules and we add on top of it a monetary policy that expands and contracts the supply of Basis in order to keep its value stable at about a dollar. I've got a question about that, because one of the big draws that cryptocurrency has had, all these hedge funds have come into the space. And they're all excited by the wild price movements that we've seen cuz they get to bet on them, you're gonna make money, lose money. So it's actually been a very exciting thing for a lot traders but you wanna get rid of that, get rid of the whole thing? Well we don't wanna get rid of it in the ecosystem, I think the speculative component of cyrptocurrency has actually been quite useful, and like you said also very entertaining. And but you know I think that there is absolutely room to take the benefits of cryptocurrency and add stability and the same way that gold coexists with the dollar you know I think today's existing cryptocurrencies which are big supply and kind of behalf a little bit like gold absolutely can co exist with the crytpocurrency like basis that's trying to be a more medium of exchange So. Yeah. Who is your target market for this? Who do you expect to be using this crypto currency most often? Maybe in the short term and the long term. So, if you look around the world, there are a lot of people in developing countries where the most stable currency that they have access to is actually devaluing at a rate of 10 % a year or more, in many cases, And so, what Basis is, it brings stable value to anyone with an internet connection, right? So people in these developing countries, the demand for stable currency is high, but the only way they can really get it is really through paper. You know? That's logistically very difficult to deal with for many reasons. But with Basis, they can just transfer it around in their heads, they can open up their computer and send it to each other very easily, internationally. And so we think that Basis kind of solves this core problem for the developing world of giving access to stable and secure currency for the firs time. I was speaking to one of your investors earlier this week, Salil Deshpande at Bain Capitol Ventures, and he was talking about in his home country of India Gold is very popular and people would buy gold to sort of a heat against a central bank and he was saying that basis maybe, maybe in the long term could provide the same sort of sales people looking for financial security and something other than what the government provides .>> And even Christine from the IMF earlier this week said that you know maybe there is a place for cryptocurrency in central banks. Yeah, well, I think what people are looking for in the India example where they're looking for gold is they're looking for something that is unmanipulatable, something that won't be changed by the whim of someone who's in power, right? That's really what they're looking for. And so I think that blockchain- And we've seen the demonetization practices of the prime minister, taking high bills out of circulation. Right, absolutely. And so what they're looking for is this kind of independence, sort of. But I think the interesting thing is that blockchain actually achieves that. And with Basis, we basically take that independent aspect of a blockchain and add a few more sophisticated rules to also bring stability. And so I think the same things that make gold attractive to people in India also make Basis really attractive at stored value. Yeah, and for payments too as opposed to just a store value. Right now you have BitCoin fluctuating quite a lot, which I think you were saying probably makes it not something you wanna spend. You've been hoddeling, I can tell. [ LAUGH ] Yes, absolutelly. Yeah I get a little heart attack every time I have to spend my BitCoin but that's just me but now absolutely I think the fact that the value is stable and not expected to depreciate really solves almost a perverse incentive with spending it but that makes it much more useful as a medium of exchange. Speaking of payments I mean you also heard this interesting story this week with PORNHUB. And now they're going to accept a CRYPTOCURRENCY called VERGE. So what do you make of that matter? I mean what is the strategy here? Well I don't know anything first hand. But my friend tells me and just kidding. [ LAUGH ] This is a safe space [ INAUDIBLE ] [ LAUGH ] In all seriousness though, this is kind of along the lines of what you'd be interested in doing with basis, right. You want to have people exchanging this, making payments. Make it a medium of exchange. Maybe not necessarily for pornography. [ LAUGH ] Well, whatever people want. As long as it's legal. But for a stable coin it might be a little bit easier to spend on porn or whatever else you want to buy. Books? Something like that? Yeah, absolutely. It's international. Accessible to anyone with an internet connection. [ INAUDIBLE ] Something that's never really existed before. And you know what it's going to be worth tomorrow. Whereas Verge, if it's worth 20 % the next day, then who knows how much porn you will be able to buy. Right, you really won't be able to map out your porn schedule as accurately as you might like. You got to budget that stuff. Well I think that's all we have time for today. Thanks you Nat so much for being here. Thanks for having me. I'm Jen Vechner. I'm Robert Hacket. And for more Balancing the Ledger please go to fortune. com. We'll see you next time. [ MUSIC ]

Nader Al-Naji, cofounder and CEO of Basis, a stable cryptocurrency whose price doesn’t fluctuate like Bitcoin, joins The Ledger team to talk crypto.