Facebook’s Libra

Last week, we wrote about Facebook’s cryptocurrency project. Facebook (FB) is expected to launch its own cryptocurrency, codenamed Libra, on June 18. Payment industry stalwarts Visa (V), Mastercard (MA), and Paypal (PYPL) have also signed up for the project. While cryptocurrencies jumped on the news, there may also be a darker side to it.

More stable than Bitcoin

Facebook’s cryptocurrency is expected to be pegged to a basket of global currencies. As a result, it’s expected to be more stable than Bitcoin. Although it’s a decade old, Bitcoin’s mainstream spread has been limited because of its volatility. Regulators worry about cryptocurrency’s volatility and the potential to use it for illegal activities. Merchants worry about its loss of value due to volatility. Facebook’s coin will eliminate some of these worries.

Scale of operations

By design, Bitcoin transactions are slow, as confirmation is needed from six miners before any transaction moves forward. The scalability issue has also limited its potential to be mainstream. It took a typical Bitcoin transaction 12.3 minutes to confirm in May 2019. On the other hand, payment processors such as Visa, Mastercard, and Paypal can process transactions almost instantly. Since all these payment processors are part of the Facebook team, it’s safe to assume that they will provide their expertise to the project. As a result, Facebook’s Libra may provide a credible solution to Bitcoin’s scalability issues.

The incumbent payment processors would obviously like to keep the market in their grip. Thus, the potential of Facebook’s cryptocurrency to kill Bitcoin can’t be denied.

Latest articles

WeWork is gearing up for an IPO. On Wednesday, the company made its IPO filing with the SEC public and expects to garner $3.5 billion from its IPO.

After FCC Chairman Ajit Pai recommended the approval of the T-Mobile–Sprint merger, Representative David Cicilline urged the FCC to allow public comment.

Cresco Labs (CRLBF) is set to report its Q2 earnings on August 21 after the market closes. The company's stock fell 5.3% yesterday.

Cannabis stocks mostly traded in positive territory today. Supreme Cannabis (FIRE) and Aurora Cannabis (ACB) rose about 9.5% and 5.5%, respectively.

NVIDIA (NVDA) stock soared 6% in today’s trading session as its Q2 earnings for fiscal 2020 beat estimates. However, its guidance missed estimates.

Nio Inc. (NIO) has disrupted the automotive space since 2014 but only made waves in the market since its IPO. Investors have suffered numerous setbacks.