Bitcoin traders appear to have been spooked by US lawmakers’ pressure on Facebook’s Libra, which has rippled throughout the cryptocurrency market. The price of Bitcoin had fallen more than 11 percent in the past four and half hours, to around $9,650 (£7,778) 4.16 PDT (9.16pm BST) – according to CoinBas.com data on July 16 – by the end of a Senate Banking Committee hearing on Libra Tuesday morning (PDT). This marks the first time in a fortnight Bitcoin has dropped below $10,000.
However Danny Scott, CEO of British-based bitcoin exchange CoinCorner believes bitcoin has nothing to fear from Facebook Libra and associated stablecoins, and even predicts the flag ship crypto will outlive these young upstarts.
Mr Scott told Express.co.uk: “These tech companies setting up their own currencies is in my eyes, a waste of time and resources and I think that will eventually show as time passes.
“And there are already five or six big, decent stablecoins out there and they are all doing exactly the same job, without bringing anything new to the table.
“They are just hoping theirs will become the default one in the years to come and they will have control over it.
“But the reality is it is not really a competitor to bitcoin, it is more of a competitor to banking and governments in that sense.
Facebook announced plans last month to launch a cryptocurrency called Libra, the latest development in its attempt to expand into e-commerce and global payments.
Like a variety of altcoins known as “stablecoins,” Libra will be backed by a reserve of real-world assets, including bank deposits and short-term government securities.
This is intended to make Libra more stable than other, notoriously volatile cryptocurrencies.
However CoinCorner COE Mr Scott remains sceptical about both Libra’s worth and their purpose.
He said: “Facebook’s Libra is trying to call itself decentralised but it is not really decentralised and that takes away a lot of the benefits of what bitcoin has over traditional systems.
“There are a variety of companies out there, some big ones are pro bitcoin and my feeling is that longer-term they will benefit more.
“Facebook have been trying to create a financial product for the last the years and they have tried numerous ways.
“So they have been trying to move into this space for a long time, and I think they are just trying to use the cryptocurrency angle and they are calling it decentralised just in order to avoid the banking regulation and the global regulation in terms of finance around that by creating their own money.
“So they are using this in an underhanded way, almost, and it is expected other companies will follow and try it out.”
What are stablecoins like Facebook’s Libra?
So-called stablecoins, like Tether, are designed to overcome the wild price swings that have rendered bitcoin and other cryptocurrencies unattractive both for commerce and as payments.
Stablecoins are theoretically more practical for paying for products or transferring money.
Most are backed on a one-to-one basis by mainstream assets like the US dollar, while others are collateralised by baskets of cryptocurrencies.
Proponents claim stablecoins could help cryptocurrencies gain mainstream appeal.
By overcoming bitcoin’s perennial headache of high volatility, the argument goes, stablecoins could pave the way for the adoption of a wider suite of blockchain- and cryptocurrency-based financial products that aren’t currently practical.