Since Facebook released its Project Libra white-paper, people familiar with the matter are speculating on whether this can affect the price of Bitcoin and cryptocurrencies in general. While many crypto experts say that Facebook’s Libra isn’t even a cryptocurrency because of the trust issues Facebook is familiar with, just as many say that this is a very good thing for crypto in general.
“You have to trust Facebook that they’re going to hold onto those dollars, they’re going to keep track of the ledger, and that your token’s going to be worth something. You go out, you buy your goods and services on the Facebook platform, whoever else is using it. Maybe Uber somehow is involved. And then you’re left with the Libra tokens that are left over,” said Brian Kelly, Bitcoin expert on CNBC’s “Fast Money”.
Brian explains that this is the main difference between Libra and other cryptocurrencies like Bitcoin. With Facebook users need to trust a trusted third-party, which holds user data and personal information, whereas for Bitcoin, users don’t have to trust a third-party with their money and data – they can check the ledger themselves. Bitcoin is trustless.
Also, another major difference is that Libra is backed by a handful of government-issued fiat currencies. That could have a political influence on Libra in the case when Facebook’s cryptocurrency is being affected by criminal or similar kind of activity. Libra could potentially be shut down in that case.
Most Likely Libra Won’t Affect the Price of Bitcoin
Libra potentially cannot affect the price of Bitcoin, because it most likely won’t have a direct influence on the cryptocurrency market as such. However, it can help people to learn about crypto as such.
Facebook will offer a nice looking wallet app, which will be very easy to use. People will get used to that, and soon as they will realize the impact of Facebook on their data and money, they will potentially start looking for other currencies.
They will see the advantage of Bitcoin and most likely, they will start looking into it more. So if we are looking at this situation from this point of view – more Bitcoin users mean more expensive Bitcoin. So, in the long run, we can see an increase in the price of Bitcoin, but directly because of the Libra ecosystem.
Facebook’s Libra already is seeing massive oppression by governments around the world. French minister of Finance, Bruno Le Maire recently stated that Facebook’s cryptocurrency “must not be allowed”. Also, German members of the European Parliament and U.S. Republicans have raised awareness to pause the project in order to look into a deeper regulation.
Moreover, Libra is just a typical traditional financial instrument in the monetary system we know. Bitcoin is not a competitor, it is a completely different asset with many different pros and, of course, cons. With the major announcement on Tuesday, people already know that a company as big as Facebook, sees cryptocurrencies as something valuable to the global society. This will only generate an easier mass adoption.