For a long time Cryptocurrency appeared to be dying a slow death. The initial hype around it had dissipated, thousands of people across the globe had lost money, some very large amounts, with regulators and governments content to leave the technology rot.
Now, out of nowhere, Cryptocurrency has a new lease of life given to it by a very unlikely source; Facebook. The Companies apparent plans to lunch its own currency called Libra are intriguing and have brought new life to Crypto markets in recent times. Bitcoin in particular has seen a price surge.
This is all within an environment more favourable to Crypto. Online bank Revolut for example allows Crypto trading as standard with all its accounts giving instant access to Crypto markets to its six million customers. More reliable and credible Fintech’s are expected to follow making it easier and safer to trade Crypto.
However Facebook’s plans may not be good for Crypto as a whole in the short term. Here’s why;
A company who’s privacy practices are under scrutiny globally wanting to have its own private currency has drawn the attention of regulators globally. Many are very unhappy. It is likely to result in the raft of new anti Crypto laws across the globe in the near term in order to prevent this.
Even if Facebook did manage to launch Libra without any major consequences, it would likely dominate the Crypto markets rendering all other Crypto useless for most legitimate purposes. Libra could become the default payment method for advertisers and transactions on Facebook giving it an unassailable advantage in terms of acceptance and legitimate use.
Therefore the current run up in Crypto prices gain seems irrational. A competitor with huge resources has entered the market and the price of the competitions stock is rising not falling, that seems unusual. None of the other Cryptos are backed by anything like Facebook, they have been around for years and have never gained any traction. They are just riding another Crypto hype wave this time initiated by Facebook.
Again this seems like a false dawn, the dream of a decentralised payment network with no state control is hardly one that will or can be fulfilled by a profit making global corporation.
Interest in Crypto is rising again, but it may be for all the wrong reasons.