Princeton graduates' crypto-currency wins backing of big U.S. investors

(In Oct 13 item, this story fixes the spelling of Josh Chen from Josh Shen in 8th paragraph.)

People walk past Princeton University's Nassau Hall in Princeton, New Jersey. REUTERS/Dominick Reuter

NEW YORK (Reuters) - U.S. investors including Digital Currency Group have taken part in a pre-sale of basecoin, a crypto-currency to be created by three Princeton University computer science graduates, Intangible Labs CEO and co-founder Nader Al-Naji said.

The other investors in Intangible Labs’ basecoin include Bain Capital Ventures, Andreessen Horowitz, and AngelList CEO Naval Ravikant, Al-Naji told Reuters.

Digital Currency Group confirmed its investment in basecoin. Bain Capital, Pantera, and Andreessen Horowitz were not immediately available to comment.

The investors had bought a unit of Intangible Labs, which entitled them to basecoin - a token with a rules-based monetary policy built into its blockchain system - in the future, Al-Naji said in an interview with Reuters on Friday.

He did not disclose an investment figure.

Blockchain, a digital ledger of transactions, underpins crypto-currency bitcoin and can be used to track, record, and transfer assets across all industries.

Intangible Labs is one of many blockchain start-ups creating and distributing tokens to investors to raise funds for their projects. Start-ups typically hold a token pre-sale to institutional investors before opening the token offering to the public.

Al-Naji, who founded the company with Lawrence Diao and Josh Chen, said basecoin essentially worked the same way as the Federal Reserve.

“We found a way to keep the price stable while keeping all the other great features of crypto-currencies such as decentralized, private, and international,” he added.

It originated from Al-Naji’s blog, called Nader Theory, in June in which he broached the idea of a stable coin that can shrink and grow its supply on the blockchain.

The blog went viral and Ravikant of AngelList - a website that connects startups and investors - and Bain came to see him to discuss his idea. That set the wheels in motion, he added.

Intangible Labs will release its whitepaper on Tuesday and the network will be launched anywhere between six months and two years’ time, Al-Naji said.

“The problem we’re solving is simple: because bitcoin is so volatile, your mom is never going to buy her morning coffee with it,” Al-Naji said.

“And you’d never even think about keeping all your savings in it. The fact is that bitcoin and other crypto-currencies are just playgrounds for speculation right now.”

Reporting by Gertrude Chavez-Dreyfuss