The founder of the crypto project Saga believes he may have the solution to the world economy’s current financial turmoil – a digital currency backed by a basket of strong fiat currencies and Bitcoin.
In an interview with Cointelegraph, Ido Sadeh Man said he fears the hyperinflation being induced by central bank money printing will lead to serious problems down the road.
He said: “It is a solution that will bring very undesirable results in the long run.”
However, according to Ido, a basket of currencies would be inherently more fluctuation-resistant.
Ido suggests employing the Special Drawing Right (SDR), which is a basket of reserve currencies – the US dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound. Man explained that the SDR is robust against price fluctuations caused by a single currency, and is therefore capable of mitigating risk.
He said, “When some of the currencies in the SDR are printing money, some of them are not printing money currently and and so again when one will go up the other will go down.”
Bitcoin is the inspiration
Bitcoin was born in the wake of the 2008 economic crisis. It was created to oppose the arbitrary monetary policies of central banks. Since then, many digital currencies and technologies have been inspired by it. Ido said Saga is one such project.
Saga’s stated goal is creating a currency that is not dependent on any single national fiscal or monetary agenda. Man says such a currency can complement our lives in the sense of being able to store value and exchange value internationally. According to Ido, Saga’s approach falls somewhere between a stablecoin and Bitcoin.
He explained: “We are adopting the same approach as Bitcoin… that we cannot control the money supply, meaning the Saga protocol does not allow us to print money at any time.”
Saga’s long-term vision, said Ido, is to adhere to the same principles that are guiding Bitcoin.
CBDC is not the answer
Ido also commented on the emerging central bank digital currency (CBDC). He thinks the CBDC is a “tokenized” currency. These digital versions of a national currency are not a true solution for the future of money, he said.
Widespread use of a CBDC could equate to huge numbers of people unknowingly granting unlimited and unrestricted access to data on their economic lives to a central authority, he said. Ido believes privacy, custodianship, and financial stability would be the three greatest challenges a CBDC would face.