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Reality Check for Bitcoin as Facebook Launches its ‘Crypto’ Consortium

Facebook is set to officially announce the full list of corporate institutions behind its new stablecoin as it launches on Tuesday June 18. Unofficial reports suggest that some of these institutions include payment processors which have been hitherto cited as competitors to everything crypto-related e.g. MasterCard, PayPal, Visa and Stripe. On the other hand are the likes of Coinbase and Xapo which are neck-deep in the crypto space.

This melange leaves a gray outlook for what the impact of the social media app’s planned currency would be for major cryptocurrencies like Bitcoin on the long term. So far, skepticism abounds as to what to expect from a collaboration of organizations like Paypal with their censorship resistance, the centralization of the likes of Visa and the privacy-laden issues that have been associated with Facebook. What new or valuable value proposition this centralized stablecoin is likely to bring may not yet be clear but the backing of these major companies that are not planning to fail seems solid.

A lot has been thrown between whether Facebook’s entry into the space with its coin, reportedly called Libra, will accelerate the rate of adoption for decentralised technologies or not. The proposed crypto-payment currency which is supposed to facilitate digital payments not just on Facebook’s site but anywhere on the internet has helped Bitcoin to notch its best weekly trading period in about three weeks. This is despite Coindesk reports that economist and cryptocurrency skeptic Nouriel Roubini says that Facebook’s stablecoin is not really crypto as it has nothing to do with blockchain.

As at this writing, a Bitcoin is trading at over $9,200 after a December 2018 low of $3,194. It is its highest level since March 2018 when a Bitcoin was above $9,700. Unlike in 2017 when price movement was largely driven by international retail demand like in South Korea and hype around initial coin offerings (ICOs), the view that institutional money is really being infused into the crypto industry is now getting real.

Whether the Facebook agenda is enough to impact the industry either way is hard to say but other related developments continue to pop up. Top among them is Binance’s announcement to issue a crypto-pegged stablecoin on Binance Chain (BEP2 token format) in the coming days. BTCB, a BEP2 token pegged to Bitcoin, is to basically make it possible for the many coins that have their own blockchains but are not native on Binance Chain to be tradeable on the new Binance decentralized exchange (DEX). The DEX would be accessible from every part of the world including the US where some have not been privileged to use an exchange.

Binance says it has reserved 9001 BTC (currently worth ~$83.5 mln) and minted 9001 BTCB to give the Binance DEX a great boost in trade volume and liquidity or even make it the world’s largest DEX by volume. BTCB will require Binance exchange native asset, BNB, to be used as fuel.

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