Google’s Parent Company Alphabet Backs New Cryptocurrency
For a while now, Google and its parent company Alphabet have been playing with the idea of getting into the cryptocurrency market given the potential for success and the huge boon it would be for the market to have Google backing cryptocurrency. The company has reportedly raised a massive $133 million in their first round of fundraising for the cryptocurrency called “Basis”.
The Basis coin is built on the Ethereum Blockchain and is meant to solve one of the fundamental issues with using cryptocurrency as a stable method for transferring value. Coins like Bitcoin, Ether, Litecoin, and just about every other cryptocurrency derives its value almost entirely from the demand for that particular coin. This is why it’s normal for an investor to see a coin’s price fluctuate by more than 10 percent and not even flinch.
However, if widespread adoption is ever going to be something that comes to the cryptocurrency industry, then there needs to be a coin that operates with a kind of built-in monetary policy to retain some form of stability. Basis is designed to automatically adjust the supply of the coin in circulation to avoid insane price jumps tied to solely to demand. This makes major changed in demand have less of an effect on the cryptocurrency’s performance since the supply can be adjusted to lessen the blow from a deep dive in prices, which are often weekly occurrences in this market.
“At Basis, we believe the price volatility of cryptocurrencies is one of their biggest barriers to widespread adoption. Unlike the currencies we use today, most cryptocurrencies do not have a mechanism to keep purchasing power stable. This means that sporadic swings in demand can cause huge changes in price.”
This excerpt is from a blog post on Medium announcing the launch of this new kind of self-adjusting cryptocurrency, described as having an “Algorithmic Central Bank”. Now, using the words Central Bank in anything crypto-related can often cause a visceral reaction by some of the more hardline believers in decentralization. But by building that monetary policy into the currency itself in the form of code, there is no chance for there to be corrupt practices as long as the smart contracts which make up the program are written competently.
It will be interesting to see Google and Alphabet’s next move given their recent ban on all crypto-advertising on their platform. A decision that seems to be fueled more by the interest in launching their own cryptocurrency and a desire for less competition instead of a precaution to protect users from scams and fraudulent ICOs.