Unpopular opinion: Facebook’s cryptocurrency is good for Bitcoin (BTC)
The node garden behind Facebook's crypto is long on Bitcoin as digital gold, while Libra is for payments.
The Block has obtained the full list of Facebook cryptocurrency backers, each of which is believed to have paid $10 million for node privileges on the impending network. The funds are believed to have gone towards the backing of the Facebook stablecoin, which will be known as Libra. Node operators will reportedly get an overview of the network as well as a seat at the governance table.
The official announcement of the Facebook coin is expected for 18 June, which will launch into testnet around the same time.
The backers are a multi-industry assortment, including a range of investment firms, some telco companies including Vodafone, both Lyft and Uber as well as eBay, Mercado Libre, Visa, Mastercard and Stripe, Spotify and humanitarian organisations such as Mercy Corps.
It also includes some names from the crypto industry, some of which are quite interesting when riding in tandem.
The centre of payments
Andreessen Horowitz is a founding node operator of the Facebook crypto network. It's also an investor in Facebook as well as in Coinbase, Anchorage, Lyft and Stripe, all of whom are also founding nodes.
At the same time, Coinbase is currently in talks to acquire Xapo, which is also a founding node. There's no confirmation one way or another yet, but some sources tentatively say Coinbase has already done the deal.
You can't read too far into that connection, given that Andreessen Horowitz invests in hundreds of different things at any one time, but it's clear that a lot of interconnected hats are hanging on Facebook's cryptocurrency ambitions.
It also seems beyond coincidence that Circle announced last week that it was bowing out of the payments space and shelving its crypto payments operations. It simultaneously announced that it would be opening the CENTRE consortium to new members. The CENTRE consortium is a crypto payments network, whose founding members include Circle and Coinbase.
In a statement, CENTRE said it ultimately imagines a "new global digital currency" that is backed by a basket of different currencies, which may one day include Bitcoin.
Facebook's Libra coin, incidentally, will be backed by a basket of fiat currencies.
Why this is good for Bitcoin
Facebook's cryptocurrency plans have, for the most part, been met with a moderate degree of derision from cryptocurrency enthusiasts.
The top response to the above tweet is also worth including given the fact that crypto companies are working together. They're working together with each other, and with Visa and Mastercard and Facebook, and they're cooperating in order to release another stablecoin.
And despite everything, this is probably good for the version of Bitcoin that's more interested in being digital gold than electronic cash.
Andreessen Horowitz has its own Bitcoin holdings, Xapo is exclusively for Bitcoin and Coinbase has been long on Bitcoin since forever. Meanwhile, institutional investors are continuing to flow into Bitcoin in particular, while being largely lukewarm on other digital assets.
There are of course concerns around Facebook's (and Uber's and everyone else's) track record on ethical and privacy issues, but that has little to do with Bitcoin as digital gold.
There's no real competition between Bitcoin as digital cash and Facebook coin either because Bitcoin (the BTC variant) doesn't have any discernible future as an actual cryptocurrency for payments. The main chain isn't built for adequate scaling, while the need to pre-fund payment channels on the Lightning Network is a functional deal breaker that will always leave it inferior to other payment solutions.
The Facebook coin is going to be a payments-oriented cryptocurrency, and the newly-revealed node garden that's growing alongside it is long on Bitcoin as digital gold.
Disclosure: The author holds BNB and ZIL at the time of writing.