By Deepta Bolaky
From banning all ads promoting cryptocurrencies back in January 2018, Facebook’s move into the digital world is definitely grabbing attention. The social media giant shared its plans to launch a new digital wallet- Calibra and a new digital currency – Libra.
At first glance, the launch of a new digital currency by one of the largest social networks and its partners is seen as having the potential of changing how people view the cryptocurrency market. The company’s international reach provides them with the advantage of influencing its users and rebranding cryptocurrencies.
Facebook is bringing the Libra project at a time where people are losing faith in the banking industry. In Australia, it was reported that 33% of Australians lost trust in banks in the last 12 months following the Royal Commission scandal. The percentage might not be as high for other major countries, but people remain wary of banks and their flaws since the financial crisis.
Mark Zuckerberg brings this project in the “aim” to address key banking issues around the world:
The company is promising a digital currency that will be more stable, cheaper and easier as a medium of exchange which can shake up the financial industry.
Good news or Bad news?
It is definitely big news – Put in your money, Receive Libra to Save, Send and Spend more cheaply and withdraw at any time. It sounds simple, but the news is already causing a backlash in Washington.
There are a lot of questions surrounding Libra and the regulations around it. Given the data scandal, its move in the digital world does not bode well with Congress:
The bellwether of the cryptocurrencies is, without any doubt being compared to Libra. Recently, the resurgence of cryptocurrencies amid geopolitical risks and slowing global growth has raised questions about whether digital assets are the new safe-havens.
In light of the above, Bitcoin is being viewed as the digital commodity while Libra as a digital currency. The distinction is mainly due to how liquid one is, compared to the other.
The distinctive characteristics of Libra may pose a threat to other major cryptocurrencies like Bitcoin, but if Facebook enters the payment space with digital asset, it will still help to change the way people view the cryptocurrency market. Overall, it is a net positive for the crypto market.
Facebook’s share price jumped following the news of the Libra Project. But, the heavy criticism around the company’s shift in the global financial services and a hearing set for July 16 by the US Senate Banking Committee has somewhat dampened sentiment.
As of writing, the company’s share price was still up for the week $187.36.
Source: Bloomberg Terminal
Bitcoin rose to a high of $ on the hype behind Facebook’s move into the digital assets but closed in negative territory after 6-day winning streak following the official announcement of Libra.
Source: Bloomberg Terminal
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