Facebook Libra Coin: Experts say cryptocurrency will be a game changer
A recent surge in value has experts spruiking and questioning the cryptocurrencies merits as a platform to serve the world’s poorest people.
Cryptocurrency has been labeled all kinds of things throughout its sharp rise and falls over the last couple of years but its recent surge in value has diehard investors excited.
Bitcoin hit a 17-month high last week of almost $AU20,000 with many traders believing the creation of Facebook’s own crypto, Libra, legitimizes the currency. With brand power on board through companies such as Visa and Uber, it’s believed the social media’s massive reach will provide the digital coin the access it needs to flourish. On Wednesday afternoon, Bitcoin was trading at more than $AU18,600, an incredible turnaround following its crash in 2018 when its value plunged as much 70 percent from its 2017 record high.
Fred Schebesta, who became one of the country’s youngest self-made millionaires at the age of 26 with the sale of his first business before founding comparison website finder.com.au, is passionate about the social capabilities of the alternative cash.
He says Mark Zuckerberg’s foray into cryptocurrency will help billions of people who don’t have access to bank accounts, such as those in developing or unstable countries.
“If there’s anyone who can bank the unbanked, it’s Facebook. Bitcoin in its main use case is not designed for countries where there is stable banking, it’s designed for countries that have hyperinflation. [If you look at] the trading volumes of how much Bitcoin is being purchased in Venezuela, it’s massively grown and people have realized it’s a stable place to store money,” Mr. Schebesta told news.com.au.
The Finder boss says there’s a direct correlation between countries such as Argentina, with an inflation of about 50 percent, and the country’s adoption of the digital currency.
“People are looking for ways where banks aren’t manipulating the value of the money, and Bitcoin provides that value,” Mr. Schebesta said.
He says there are a billion people who don’t have a bank account across the globe, but a lot of those have a phone and access to a Facebook account. Mr. Schebesta said a similar alternative already exists in Africa where a popular way to transfer money is through M-Pesa, which is essentially phone credit.
“That’s the main way people pay each other in Africa, they just send each other a text and it moves money. A similar thing happens with Paypal if you pay someone you send them to an email address and it transfers across,” he said.
The cryptocurrency sceptics, however, are equally passionate.
Bitcoin blogger and Attack of the 50-foot Blockchainauthor David Gerard said any suggestion Libra will serve those from low socio-economic communities is “one hundred percent Facebook marketing”.
“They really haven’t thought any of this stuff. That’s surprising for a company of this size but their explanations don’t make coherent sense at all,” he told news.com.au.
“There’s no reason to think they can ‘bank the unbanked’, 1.7 billion people with bad documentation but also have Libra be allowed to hook into the international financial system and keep to anti-money-laundering laws.”
Mr. Gerard said the recent jump in value is more associated with margin traders playing games with the price rather than people suddenly being twice as interested in Bitcoin.
“More informed analysts are crediting ‘tethers’, dollar-substitutes that are popular with the sort of crypto exchange that’s too dodgy to get banking,” he said.
The Bitcoin market is so very thinly traded that it’s easy to manipulate the price to whatever you need it to be. The usual reason is to wipe out margin traders you’re betting against.
The price crash a few weeks was due to a single trade, which won someone a margin bet.
“As long as a trader can make more money on a margin bet than it costs to rig the price that the bet depends on, they’ll do that.”
He squashed the legitimacy of the recent surge, saying there’s been “no volume increase on those few crypto exchanges that deal in actual dollars, not like they did in 2017”.
“My big warning is for retail investors: make sure you know what you’re getting into,” he said. “This pool is full of sharks, and you look tasty.”