Why’s the RBA So Afraid of Facebooks Libra?

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I believe Facebook’s Libra could replace bitcoin as head honcho of the crypto world.

Of course, that’s just my opinion.

But one of the hardest things about bitcoin for the masses has been its day to day use.

It’s one thing for companies like Microsoft, Metropolitan Hotel Sydney, or Squirrel Café in Melbourne to accept bitcoin.

But using bitcoin in exchange for cash or even a Visa card…we’re still donkey years away from that.

‘Why is that’, you ask?

Most people still see bitcoin as an investment and not a means of payment, I believe.

That is, they would rather buy and hold bitcoin in anticipation of it hitting $100,000 than to spend it at their local café or an online shop. Today, bitcoin is around US$7,800, or $11,398 Aussie dollars.

I could be wrong. Though, I haven’t seen our editors advise you to buy bitcoin so you can spend it at a local café.

Libra may be the crypto solution

Anyway, Libra. The coin that’s being developed by Facebook, plus a bunch of other big companies, could really change the dynamic.

Here’s Libra’s mission…‘to enable a simple global currency and financial infrastructure that empowers billions of people’.

Think of Facebook, today. It’s available to everyone and has around 2.37 billion active monthly users.

Of that 2.37 billion active users, 1.56 billion use it every single day of their lives.

Since 2004, Facebook’s mission is ‘to give people the power to build community and bring the world closer together.

I think they pulled it off.

And as soon as Libra launches, if it ever does, that is…how many of their 2.37 billion users will adopt it?

It might not be 100% of them. But surely it will be more than bitcoin.

The RBA hates competition

Not everyone buys this story, though.

The RBA has already expressed doubt over cryptocurrencies.

They don’t think they’ll ever be a viable solution.

The RBA is of the impression that government-backed currencies are king. That’s not their own words, but I’m paraphrasing here.

In Australia, it is unclear that there will be strong demand for global stablecoins even if they do meet all regulatory requirements, particularly for domestic payments.

Australia is already well served by a range of low-cost and efficient real-time payment methods, such as the NPP [New Payments Platform] that utilize funds held in accounts at prudentially supervised financial institutions.

That’s what the RBA said in a Submission to the Senate Select Committee on Financial Technology and Regulatory Technology, you can read it here.

I agree with the RBA in the sense that bitcoin, and currently available cryptocurrencies, won’t take off.

There is no viable marketing and ease of use to bother making the switch.

I’m really interested in the way Libra will do it, though. I think this cryptocurrency can change our view.

Forget it, we’re not getting Libra

Again, that’s if Libra ever makes it through the Australian border.

CoinDesk recently said…‘the RBA believes a “digital Australian dollar” would be an unnecessary disruption to the existing financial system, particularly for retail use.

Yep, fair enough…what about Libra, though?

Well, here’s what the Financial Review has to say:

The Reserve Bank of Australia has quashed hopes of Facebook launching its digital currency in Australia revealing that even if it was heavily regulated as required, there would not be enough demand to justify such efforts.

OK, I admit that there is very little demand for cryptocurrencies. A lot less than some like to make out.

Maybe there’s something we’re missing here, though.

Why is the RBA so scared of digital currencies? I mean, it’s clear we probably wouldn’t need them if we had crypto instead.

I say it’s time that Australia had a strong foreign rival to shake things up.

If you’ve been overseas, you’ll know that we’re very far behind, technology-wise.

Anyway…I think Libra is a crypto you should watch.

Until next time,

Jonathan Evans Signature

Jonathan Evans,
Analyst, Profit Watch

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