The Most Revolutionary Concept in Stablecoin is on Page 18

So what’s on page 18? On page 18 of the (beta) whitepaper of Basis, the following is stated:

If Basis begins to command a significant share of the world’s transaction volume, we can assume that some goods will begin to be sold at prices denominated first in Basis. In such a world, the Basis protocol could be updated to a peg that is independent of any local currency — most probably, Basis could peg to the Basis-denominated prices of a basket of goods.

In plain English, this means Basis would move away from a USD (or other fiat peg) and attempt to mimic the consumer price index. Why is this important? It’s important because inflation eats away the value of your money. In the US it’s not too bad, about 2%-3% per year but in hyperinflationary countries, your money can devalue from 10%-90% in a year (think Venezuela and Argentina). But even in USD, inflation devalues your money over time. $100 in 2008 has a buying power of $85.86 today, approximately a 14% loss over 10 years! By pegging Basis to an inflation index or consumer basket of goods, Basis would provide true economic value to the user.

Is this going to happen with the Basis stablecoin? It is way too early to comment on that. However, I’m excited by Basis because this is the first whitepaper that I’ve read that specifically addresses inflation within a stablecoin context.

Disclosure: I currently have no financial involvement with Basis or any of the venture capital firms invested in Basis.