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Will Libra Eventually Usurp Bitcoin?

Michael K. Spencer
Jun 19 · 6 min read

To be completely honest, both Facebook as an entity and Bitcoin as a digital asset have massive trust problems.

Libra’s blockchain and coin will be more of a stablecoin hybrid digital currency, half way between fiat and a token. It will lack the real decentralization aspect that makes crypto enthusiasts so faithful and loyal to Bitcoin’s mystique.

Bitcoin’s Headstart Is Irrelevant Now

But Bitcoin has had 10 years to mature and achieve mass adoption, and hasn’t. While the Lightning Network shows incredible promise, Facebook’s Libra coin might be the first mover in terms of actual integration with payment hubs and technology services.

Libra essentially might be seen as a first mover even though crypto and blockchain had a 10 year head start. Ethereum and Bitcoin didn’t do enough with that time.

Libra as an On-Boarding Gimmick for Blockchain Transactions

While Libra’s enthusiasm and on boarding will in the short-term drive Bitcoin’s price up and the total cryptocurrency market as a whole, in the long term, in the years and decades to come — Facebook’s model of what “crypto” is could usher in an era of centralized stablecoins as being actual digital currencies and not the cryptos you might find on coinmarketcap dot com.

If Facebook is even moderately successful, it’s an existential threat to Ripple/XRP, Block.One/EOS and many, many others.

To say that it could challenge and dethrone Bitcoin or Ethereum, however, is a big ask. This is because many of the crypto enthusiasts were born in an era where the mistrust of Facebook was already widespread.

It becomes a centralization vs. decentralization debate all over again.

Libra coin will be a security under the jurisdiction of the SEC.

Even the pretension that’s it’s a decentralized cryptocurrency is a PR ‘mistake’ of epic proportions by Facebook because that’s not a transparent or authentic version of what it will actually represent.

Digital Assets vs. Digital Currencies

However in the real world, Bitcoin is digital gold, it’s a digital asset, and a Libra coin could be a much more useful and convenient mechanism in between fiat money and crypto money.

It would fall in the middle of the spectrum and have the best of all possible worlds, even if it’s not technically a real crypto because it lacks an aspect of true decentralization.

The Libra association of powerful founders is exactly what you don’t want to see in a decentralized blockchain product or startup — just as EOS and XRP have their shadowy corporate company in the background calling the shots.

The Libra Renaissance of Crypto & Digital Currency Transactions?

But could Libra blockchain compete with Etheruem and Bitcoin? Yes, most certainly.

Libra could usher in a crypto singularity that will make a lot of people and crypto investors rich, but in the long term it could dismantle the crypto movement as we once knew it.

It could and likely will replace the role cryptocurrencies could have played in the world. Bitcoin’s price rise in the short term in 2020 is almost guaranteed, but if it became too powerful Libra coin could destroy many of the current leaders in the cryptocurency marketplace economy.

Will Crypto Altcoins Survive the Era of Libra Blockchain?

The vast majority of those altcoins could be worth nothing by 2025 if Facebook has its way with crypto.

Public blockchains with legacy tech and infrastructure and scalability limitations obviously won’t go anywhere in this brave new world.

From the perspective of a blockchain startup that works really hard to build a product that’s truly decentralized, how do I put this?

Facebook is doing its usual fraudulent PR scam by calling the Libra coin a “crypto” at all. Libra isn’t as decentralized as a normal cryptocurrency. Not even fu*king close. I say this with no disrespect for what Facebook is trying to build and hype up. It’s thinking like a business, a veritable Tech behemoth, not like a blockchain startup full of idealistic young engineers.

Facebook’s Stock is Up, Bitcoin’s Price is Up

Facebook’s stock price is up since the Libra announcement and it’s the best FAANG performing BigTech giant in 2019 on Wall Street.

Obviously everyone is entitled to their opinions about the impact of the Libra blockchain on the world. Whatever happens, it will take time to unfold.

The Twitter crypto scene seems to think that the Facebook crypto name is purportedly named as a dig at the Winklevoss twins’ Gemini exchange. The digital asset will be a stablecoin supported by a basket of international currencies.

Libra Appears to be Using the ‘Android Playbook’

The reality is Facebook’s Libra coin sparking “mass adoption” could just be what in the end kills real cryptos. This is how BigTech operates. We’ve seen what happened to the traditional Media industry already with Facebook.

This is called the “Android Playbook”, and is dangerous because it pretends it’s collaborative but beneath that it’s destructive, it wants to own the channel and the direct to consumer advantage.

This is of course how Google and Facebook grew so big and are duopolies. The playbook is a “join or die” version of technological digital transformation. Some analysts even believe such a digital currency could be a threat to fiat currencies, or even establish a global digital currency standard of a hybrid cryptoeconomic global economy.

Here Libra Coin won’t just be reportedly transferable between Facebook products with zero fees, giving the social media platform a unique position in the financial services sector. It will also have loyalty rewards, interest and incentives to consumer Ads with its Libra Association partners.

Business-to-Business (B2B) Adoption Matters Too

Whether or not Libra coin will compete with Bitcoin remains a matter of speculation. However some of the features of the Libra Blockchain already have more B2B relevance than Bitcoin for merchants, brands and retail partners who trust and do Ads with Facebook.

Facebook’s Libra coin just needs to be more convenient than Bitcoin to disrupt it. Most people above 40 don’t and won’t touch Bitcoin with a 10-foot pole. Most people under 25 won’t be excited about Libra Coin. All Facebook has to do is be convenient enough for all ages to opt in, especially however those active on WhatsApp and older folk on Facebook’s legacy flagship app.

The Race to Mainstream Adoption, Libra vs. the Lightning Network

Disrupting Bitcoin for mainstream appeal isn’t actually that hard. It doesn’t matter what the 20 million or so core followers of Bitcoin think about Libra Blockchain so much as that the developing world and the youth of places like India, Brazil, Indonesia and Africa use it. You have to understand who the core audience for Libra is to understand how it could disrupt cryptocurrencies as we know them.

Bitcoin will likely spike over $10,000 USD in 2019. However over time, in the 2020s, it could lose some of its value if Libra coin gets mass adoption rates as we might anticipate it could rather easily do in the early 2020s. Even though Bitcoin is likely to remain a digital asset of some repute, since it’s not backed to anything tangible it may have difficulty maintaining this value in the decades ahead.

Will Stablecoins Dominate the Token Economy?

One scenario has hybrid stablecoins such as Libra coin, J.P Morgan and other BigTech clones of this hybrid model taking marketshare over more decentralized cryptocurrencies that have less real-world backing and interaction.

Facebook’s Libra blockchain has a lot of promise, and it could bode well and then not well at all for Bitcoin. Facebook has a track-record of global growth and mass adoption, so it will be interesting to see if they can replicate it as a payments and blockchain company.

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Michael K. Spencer

Written by

Blockchain Mark Consultant, tech Futurist, prolific writer. LinkedIn: michaelkspencer

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Discovering the optimal lifestyle of the future.