Libra Still a Major Threat to Bitcoin

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Remember Libra, Facebook’s troubled stablecoin project? We all kinda forgot about it in recent months amidst the COVID-19 pandemic and Bitcoin’s up-and-down price. Even thought still not launched, one expert believes that when the time comes, Facebook’s stablecoin will seriously shake things up on the crypto market.

Academic and economist John Vaz was quoted saying that Bitcoin might end up being treated like “prison cigarettes” during the inevitable financial crisis in the wake of the viral outbreak. The Monash University academic has predicted dark days ahead of Bitcoin with Facebook’s Libra taking its spot. He based his opinion on the fact that Libra was created as a scalable network for payments which is the opposite of Bitcoin.

That, according to Vaz, may be the reason why Facebook’s stablecoin might be the future of transactions instead of Bitcoin.

A “Very Interesting” Stablecoin

The economist further called Libra a “very interesting” project that could forever change the way we make transactions. Markets such as Instagram, Facebook, and WhatsApp are custom-tailored for Libra. Thanks to this, large tech companies can tap into that source and use existing networks to spread Libra’s influence quickly.

People are already making transactions on these networks, so the pipeline is already laid out there. By capitalizing on this massive user base, Vaz claims that Libra could easily overthrow Bitcoin. Facebook will surely target markets and countries that are developed, “entrenching” themselves everywhere as the academic explained which will give Libra wings to spread.

He further went on to voice his opinion on Bitcoin’s current state amidst the viral pandemic. According to Vaz, the leading cryptocurrency will correlate with mainstream markets in the short term. He may have a point there – although Bitcoin’s price has jumped recently, it suffered from the same liquidity crisis as most markets. As Vaz explained, people dump these markets when things go chaotic.

We’re in the middle of a war with an invisible enemy and numerous markets have taken a dip. There are only a few commodities untouched (to a point) from the crisis – things like gold. The door is open for Bitcoin to make a glorious entrance. Many countries may possibly turn to cryptocurrencies as an alternative form of money. However, this will also depend on Bitcoin’s wider adoption among institutions. If they are hesitant to adopt the largest cryptocurrency on the market, it may become obscure.

At the moment, Bitcoin isn’t even closely as valuable as gold. However, in prison (read: among criminals), the two are definitely equal in these challenging times.

Central Bank Digital Currencies Are Not a Competitor

In recent times, many governments have pondered the idea of CBDCs as an alternative form of money. Countries are reluctant on Bitcoin, yet want to test the water with centralized digital currencies.

Vaz says that they’re not a real competitor. This defeats the whole point of cryptocurrencies – you can’t create money by way of credit. With Bitcoin, you can’t lend what you don’t have, and there’s no central authority controlling it.

If governments want a truly alternative form of money, Bitcoin and cryptos are their best option.

April 15, 2020: • No Comments

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