Facebook’s plans to launch its own digital currency, Libra, might have posed competition to bitcoin, but their new product lacks the essential elements to function as a real cryptocurrency, according to Bart Smith of Susquehanna International Group, LLP.
The head of digital assets said in an interview to CNBC that Libra is nothing but a “digital token,” which brings no innovation to the world of decentralized cryptocurrencies.
“Libra is backed by government-issued fiat currencies. Its held in global custody banks and the transactions are validated by a bunch of corporations, which includes MasterCard, Visa, and a group of Silicon Valley venture capitalist.”said Smith.
The analyst added that the Libra, despite its shortcomings as a cryptocurrency, succeeds in presenting a higher use case of blockchain. The Facebook token can move assets across borders, which is, as Smith said, exciting.
Benefits for Bitcoin
Echoing sentiments of many cryptocurrency experts, Smith said that Libra is less a competition and more an opportunity for bitcoin, the world’s first and foremost cryptocurrency. Facebook’s global outreach to over two billion people could mean that more would be able to learn about the concept of the internet economy.
“I think [Libra] shows excitement in the space but I think there are two reasons why it is clearly a benefit for bitcoin. Most of the time when people dig into bitcoin, and really understands it, they tend to be more positive about it. But when people are negative about bitcoin, they tend to be ill-informed generally speaking. And so, if among two billion users on Facebook, some of them start to look at Libra, and understand how it is different and similar to Bitcoin is positive.said Smith.
The bitcoin price has appreciated by more than 21 percent against the US dollar since the Libra’s official announcement. It is now trading at $10,911, according to the data compiled by CoinStats’ cryptocurrency portfolio management app.