Bitcoin's Trojan Horse: 6 Predictions for Facebook's Cryptocurrency

Introduction:

1. Libra will be a force for good in developing countries

2. Facebook will pay interest to Libra holders

3. Facebook's foundation will gain huge influence in the capital markets

4. The project will face regulatory uncertainty

5. Some questions will be raised

6. Libra is Bitcoin's Trojan Horse

Caitlin Long, a cryptocurrency advocate in Wyoming, USA, shared her predictions for Facebook’s upcoming cryptocurrency project “Project Libra,” explaining why it could be a “Trojan Horse” for Bitcoin.

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Facebook’s cryptocurrency, now called “Libra” (and no longer GlobalCoin as originally believed), is expected to release its white paper on June 18.

So what is the long-term forecast?

“Predicting what @Facebook’s cryptocurrency means. Grab your popcorn, I’ve crunched through public disclosures and made 6 predictions, 2 of which are controversial (#2 and #6). — CaitlinLong (@CaitlinLong_) June 9, 2019”

1. Libra will be a force for good in developing countries

Libra will be heavily promoted in developing countries where fiat currencies are volatile. Long highlighted Venezuela as the most obvious example, saying:

“By providing citizens in developing countries with a more reliable store of value than their government-backed currencies, Facebook’s cryptocurrency would indirectly enforce fiscal and monetary discipline on developing countries — which would improve the lives of many people around the world.”

2. Facebook will pay interest to Libra holders

Long believes that Facebook will face a backlash from users if it doesn’t share interest income from the assets backing the cryptocurrency. While most stablecoin projects will pocket money, Libra may be too big and too conspicuous to escape responsibility.

It could also highlight the level of corporate subsidies the Fed has provided to U.S. banks, which is prompting calls to roll them back.

3. Facebook’s foundation will gain huge influence in the capital market

Facebook plans to hand over control of Libra to an independent foundation it has set up in Switzerland. This foundation is likely to become powerful in global capital markets, just as it will do what central banks do. It will define the relative weights of the fiat currencies that Libra is pegged to and manage those assets.

4. The project will face regulatory uncertainty

This is a positive thing because it will highlight how inappropriate existing regulations are for cryptocurrencies. Long also pondered:

“Because its project will create a tax data honeypot for governments, can Facebook get concessions from regulators that smaller startups don’t?

Either way, Libra should bring more clarity to the rest of the cryptocurrency space.

5. Questions will be asked

Facebook plans to adopt a stricter form of KYC and AML than most cryptocurrencies. This will lead to the aforementioned “tax data honeypot” as governments will be very keen to track every dollar spent by citizens. This is not to say that Facebook will necessarily agree to provide such a service, though.

However, Facebook, which has a lot of bad history with data security, will be the topic of much discussion, and now its corporate might will extend to the monetary realm.

6. Libra is a Trojan Horse for Bitcoin

Facebook’s cryptocurrency will be a huge boost to interest and education in the field. However, Long believes that Libra will be a detour on the way to greater adoption of Bitcoin.

Bitcoin is scarce, while Facebook's cryptocurrency is not. Over time, people will move to store their hard-earned wealth on the most honest ledger, rather than fiat currency or its derivatives, including Facebook's cryptocurrency.

The same thing happened in Venezuela; when the country’s President Maduro tried to educate people to support the government-issued Petro, citizens ended up gravitating toward Bitcoin instead.