Some of the world’s best-known economists on Thursday announced plans to create what could be described as the thinking person’s cryptocurrency. Saga aims to address many of the criticisms frequently thrown at bitcoin, the world’s biggest cryptocurrency, to position itself as an alternative digital currency that is more acceptable to the financial and political establishment.
It is being launched by a Swiss foundation with an advisory board featuring Jacob Frenkel, chairman of JPMorgan Chase International and former governor of the Bank of Israel; Myron Scholes, the Nobel Prize-winning economist; and Dan Galai, co-creator of the Vix volatility index. The Saga token aims to avoid the wild price swings of many cryptocurrencies by tethering itself to reserves deposited in a basket of fiat currencies at commercial banks. Holders of Saga will be able to claim their money back by cashing in the cryptocurrency.
The currency also aims to avoid the anonymity afforded by bitcoin, which has raised financial crime concerns with regulators and bankers. Saga will require owners to pass anti-money laundering checks and allow national authorities to check the identity of a holder when required.
Oh so respectable sounding! They’re not doing an ICO, instead there is a variable fractional reserve system, and the ruling principle is that Saga, the asset, “entitles its investors to a rising number of Saga as usage of the cryptocurrency grows.” It sounds like a bet on the notion that bootstrapping is central to crypto success. But do investors really want “safe harbours from the raging volatility”? Do investors want a currency at all? By the way, this one is proof of stake, not proof of work.
Do the participants have too much skin in other games? So far I don’t see the point of doing this one, as it doesn’t create an asset with a truly different risk profile than the others, not from what I can see.