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shiunsai (OP)
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June 19, 2019, 07:28:59 PM |
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The Libra, the cryptocurrency developed by Facebook, promises to be massively used from its launch in 2020.
However, this product is of little interest for Western investors.
This is a legitimate question that some people ask, while Bitcoin prices flirt with the threshold of 10,000 dollars per unit: should we invest very early in the Libra, the cryptocurrency presented by Facebook Tuesday, June 18? It must be said that those who believed in Bitcoin shortly after its creation in 2009 are now happy millionaires (for those who have not sold). But for the Libra the observation is different. Its mechanism is designed to ensure the stability of its course so that users use it in everyday life. This is the fundamental difference with bitcoins that are kept in the hope of future appreciation.
Once its reserves are set up (a billion dollars to start), Facebook will index its Libra on a basket of traditional currencies (dollar, euro, pound sterling and yen). Thus, the value of the Libra should remain relatively stable because these major currencies are the ones that fluctuate the least in relation to others in the world. It is therefore unattractive to invest in a cryptocurrency whose price should vary only marginally. But that will not be the case everywhere.
In some less developed countries, particularly in countries where there is exchange control or high inflation, I think citizens might have more confidence in Facebook than in their government.
They target in particular Venezuela where inflation should reach 10,000,000% in 2019 according to the International Monetary Fund.
Other serious candidates for the hoarding of Libra include Zimbabwe (73.4% expected inflation in 2019), Sudan (49.6%), Argentina (43.7%), Iran ( 37.2%), South Sudan (24.5%), Liberia (22.3%), Angola (17.5%), Turkey (17.5%), Uzbekistan (16.2%), , 5%), Sierra Leone (15.8%), Libya (15%), Haiti (14.9%), Egypt (14.5%), Turkmenistan (13%), Nigeria ( 11.7%) and Zambia (10.7%). Some citizens living in states like Cuba and North Korea could also find an interest if they manage to break the censorship of their Internet.
Moreover, many emerging countries are affected by inflation, devaluation, exchange control, authoritarianism and arbitrary state, Venezuela being an extreme and emblematic case. I even go further, I see in the Libra a competitor of importance for the state currencies. The public debt, the printing press and the disease of zero rates are gradually destroying the yen, the euro and the dollar, we can legitimately worry about these currencies and for their banking systems, there is too much debt, too much debt leverage in banks.
As long as the Libra remains indexed on a basket of traditional currencies, the euro or the dollar have little trouble to be made. On the other hand, I think that this formula could last only one time, as the credibility of the Facebook cryptocurrency asserts itself. Indeed, it is easy to imagine how an FBCoin could emancipate itself from its function of representing traditional currencies, and acquire its own value of use. it would be enough for Facebook to offer a set of services using this currency, as well as bridges with external services. Therefore, the FBCoin would de facto obtain a use value in a given community - that of its 2.3 billion users - instead of depending (only) on the price of traditional currencies.
So, it may be interesting to have some libras hidden under his mattress in anticipation of dark days. Or a handful of bitcoins because people will understand that the Libra depends on Facebook and that the rules of the game can change arbitrarily. This is not the case for Bitcoin which does not belong to anybody and that this one will see then its reinforced role.
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