Facebook cryptocurrency Libra is an imitator of Bitcoin, Meltem Demirors of CoinShares testified before the US Congress on Wednesday.
The chief strategy officer appeared before the House Financial Services Committee to explain the difference between Bitcoin and thousands of cryptocurrency projects that takes inspirations from it. Putting Libra in the same bag of imitators, Demirors attempted to decouple bitcoin from it, focusing on how the cryptocurrency is entirely different than Facebook’s version of global payment service.
“We are seeing a wave of interest in cryptocurrencies and countless imitators which borrow some features but – decidedly – are not cryptocurrencies,” she said in her address. “Libra is not a cryptocurrency.”
The Differences
Demirors touched upon the various factors that separate Bitcoin from Libra, such as decentralization. The fact that no single entity or person could block or censor transactions on the bitcoin network undermined Libra, which is an entity controlled by a group of companies with the ability to practice censorship.
The CoinShares executive also stressed on the underlying value of Libra and Bitcoin. She highlighted that Libra would be pegged to a pool of fiat and other reserves. On the other hand, Bitcoin remains its own asset, backed by its own scarcity and demand for it.
“There is no entity that holds assets that give Bitcoin value,” Demirors clarified.
Third and last, Bitcoin is permissionless, meaning anybody can enter or exit its network without anybody’s permission. On the other hand, people will require to seek permission from Facebook to access Libra, which does not adhere to the idea of bitcoin.
Bitcoin is Not Going Away
Demirors’ statement appeared in the wake of Congress’ concerns about Libra which, following the comments of US President Donald Trump, got extended to the rest of the cryptocurrency sector. Trump last week bashed Libra and Bitcoin in a string of tweets. That sent the bitcoin’s spot rate down by 31 percent as of July 17, 11:00 GMT. The investors’ confidence in the cryptocurrency also suffered after Treasury Secretary Steven Mnuchin called it “a national security threat.”
I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity….
— Donald J. Trump (@realDonaldTrump) July 12, 2019
The US Congress, meanwhile, kept its focus on Libra, a cryptocurrency it believed is an attempt to replace sovereign currencies. The lower house of representatives called on the Facebook executive David Marcus on Wednesday to get answers. Marcus affirmed that they would not launch Libra cryptocurrency without the permission of US regulatory authorities.
In her attempt to separate bitcoin from the Libra mess, Demirors reiterated that the technology is untouchable. She compared it with the internet, an open, distributed, and borderless protocol, which cannot be regulated or governed. She told the Congress:
“I urge you to view Bitcoin as an open public network that enables innovation and growth. And to treat Libra and its future imitators in the context of the facts: private efforts led by corporations holding billions of dollars of the public money. These things are not Bitcoin and not cryptocurrencies.”
The bitcoin price recovered by up to 10.55 percent following Demirors’ testimony. It is now trading at $9,428 on Coinbase exchange.