Facebook’s Libra and Bitcoin both have been sharing the spotlight recently. Bitcoin was launched in 2009 and, in recent years, has become the talk of the internet. Meanwhile, Libra is the new kid on the block, with Facebook unveiling it just last month. According to eToro, only about 58% of the 600 people surveyed in the US know about bitcoin. Meanwhile, at least 16% already know about Facebook’s Libra. Who, then, will win the crypto adoption game? Let’s find out:
Facebook’s Libra project is arguably the mother of all FinTech if viewed from the perspective of global user bases. Interestingly, Libra isn’t bringing anything new to the table. Its only edge is its access to a ready-made market of over 2 billion Facebook users. Both Bitcoin and Libra allow for seamless cross-border transfer of assets.
Some quarters have argued that Facebook should have opted for launching from Africa, where laws in respects to blockchain and cryptocurrency are more relaxed. However, it appears Facebook would prefer the regulatory certainty of the US while the focus for market acquisition would still be Africa and Asia. The logic here is that the layman would always pick a system that is subject to regulatory oversight, however untrustworthy the source.
For the decentralized system in which bitcoin functions, taking control away from the government and private institutions has always been the main motivation. This is why bitcoin allows for verifiable and transparent transactions while preserving complete anonymity. Meanwhile, in order to access Libra, KYC is mandatory.
But can Facebook and its clique of big companies be trusted to have the best interests of the masses in mind? Very unlikely, if the Cambridge Analytica saga is anything to go by.
President Donald Trump last week tweeted that bitcoin’s value is “based on thin air”. For years now, this has been a favorite of bitcoin critics. Facebook says Libra will be backed by physical and financial assets like government-issued currencies and other instruments. On the flip side, bitcoin is a volatile digital currency whose value is based on demand, limited supply and network usage.
How does Libra intend to hedge against inflation since tokens are pegged? We’re on the lookout for answers. Will it mint more Libra tokens? With bitcoin’s fixed supply, it has a better edge against inflation.
Switzerland-based Libra Association is comprised of big-name companies that have invested $10 million each in the project. For bitcoin, negative news about regulatory oversight affect the market negatively. This was more evident lately with Libra (erroneously coupled with other cryptocurrencies) sitting on the hot seat of the Senate banking committee hearing.
According to the Libra whitepaper, sending money using Libra would be as easy as sending messages, images and videos on Facebook. With bitcoin, things are more technical. A newcomer has to grapple with hot/cold wallets, private keys, passphrases, etc. This is because, with bitcoin, you are your own bank.
Humans will always go for the more convenient and understandable option. Currently, bitcoin appears to be a formidable rival to Facebook’s Libra, but this could change abruptly in the coming years. The larger market share will go to the one chosen by the masses. It is not clear yet who will win this adoption game. But these developments, on both sides, will certainly accelerate mass adoption. Perhaps then, we will get to understand cryptocurrency as the money of the people, by the people and for the people.