The bitcoin and cryptocurrency industry has struggled with social media giant Facebook’s troubled plans to launch a bitcoin rival, dubbed libra, next year.
Some have suggested technology companies would be better off adopting bitcoin than attempting to create a centralized alternative, as micro-blogging platform Twitter is doing.
Now, Facebook’s head of cryptocurrency projects, David Marcus, has said that he sees bitcoin as “digital gold,” and while it’s held back by its extreme volatility, bitcoin “serves a completely different purpose.”
“I don’t think of bitcoin as a currency,” Marcus said, speaking at the New York Times DealBook Conference last week. “It’s actually not a great medium of exchange because of it’s volatility. I see it as digital gold.”
Many have made the comparison between bitcoin and gold in the past, with those most bullish on bitcoin hoping that the digital token could eventually surpass gold’s $8 trillion market value.
The total value of all bitcoin is currently just $160 billion, some 50-times less than gold.
Bitcoin’s extreme volatility, which has seen it swing wildly over the last few years from under $1,000 per bitcoin at the beginning of 2017 to almost $20,000 less than 12 months later, has led to fears financial regulators could crackdown on bitcoin and cryptocurrency investment opportunities.
Bitcoin and cryptocurrency market watchers had hoped prices might begin to stabilize as the market matured but that has failed to happen with bitcoin continuing to make daily market moves far beyond traditional currencies, commodities, or company stocks.
The bitcoin price, which was heavily sold off last year, rebounded strongly through the first half of 2019, largely due to reports technology companies were beginning to take an interest in bitcoin and crypto.
After Facebook unveiled it plans for a bitcoin rival, taken by many as a tacit endorsement of bitcoin and blockchain technology, bitcoin’s latest bull run stalled as investors fretted it could lead to an increase in regulation.
U.S. president Donald Trump was among world leaders, politicians and regulators who publicly spoke out against Facebook’s libra plans, with some of them suggesting it could encourage criminal activities and undermine central bank control of the economy.
Facebook has argued it would like to work with regulators and governments around the world to create libra and has distanced its project from bitcoin and existing cryptocurrencies.
“[Bitcoin is] an investment class that’s decorrelated from the rest of the market,” Marcus added. “Why feel threatened by that?”
“People don’t use a unit like digital currency of bitcoin to pay for things just because it’s so volatile. It serves a completely different purpose.”
Unveiled earlier this year, Facebook’s libra project is intended to serve as a digital currency and is expected to be primarily used in parts of the world with less developed financial infrastructure.
Facebook’s plans have, however, somewhat unraveled since June, with a handful of the originally 28 companies assembled by Facebook to form the Libra Association quitting the group and Facebook’s chief executive Mark Zuckerberg criticised by U.S. senators.