LIVE NOW

Unpopular opinion: Facebook’s cryptocurrency is good for Bitcoin (BTC)

Posted: 17 June 2019 3:09 pm
News

Picture not described

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.

Picture not described

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.



Also watch


Disclosure: The author holds BNB and ZIL at the time of writing.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

Latest cryptocurrency news

Picture: Shutterstock

Latest crypto guides

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and Privacy & Cookies Policy.
Ask a question
Go to site