The price of Bitcoin (BTC) surged over the weekend and has gone beyond US$11,000, which is garnering renewed interest in the cryptocurrency. Coincidentally, Facebook (NASDAQ:FB) announced last June 18 the launching of a digital currency in 2020. Many attribute the rise of the most popular cryptocurrency to Facebook.
Rabid followers are not crediting the social media giant for the sudden surge of BTC. They believe the rebound is due long before Facebook made Project Libra known. The structure of the intended digital currency is based on blockchain technology. HIVE Blockchain Technologies (TSXV:HIVE) might be boosted too.
Bitcoin proponents argue that the rise started a few months when the digital asset bottomed to $3,500. They are claiming Facebook’s Libra project has nothing to do with BTC reaching the highest level in 15 months.
According to cryptocurrency analysts, BTC is gaining momentum because investors are starting to view it as an alternative hedge. The continuing trade saga between the U.S. and China would necessitate the hedging of capital into Bitcoin.
Facebook’s forthcoming “stablecoin” is actually different from Bitcoin. The value is supposed to be unchanging and consistent, if not constant all the time. Libra will have the support of a collection of low-volatility assets.
They consist of bank deposits and short-term government securities in currencies coming from stable and reputable central banks. Facebook’s goal is basically to introduce a blockchain-enabled currency that is comparable or analogous to traditional currencies people are already using.
However, demand is what drives Bitcoin, which is reliant on blockchain technology and its concept. In effect, BTC is like gold, whose value is dictated by demand. And BTC is doing fine, even without regulations in place.
Advancing the blockchain concept
Even with the stand of Bitcoin followers, the entry of Facebook’s entry in the cryptocurrency space will lend credence to Bitcoin and other digital currencies. Facebook’s stablecoin could serve as a gateway to the cryptocurrency market for the company’s two billion users.
Soon, this huge network of users will be more open or receptive to Bitcoin and other digital assets. Facebook has solid financial partners like MasterCard, Visa, PayPal, and Spotify Technologies.
Facebook could very well reshape the corporate world if stablecoin becomes successful. People can send, receive, spend, and secure their funds. Also, it might pave the way for a more inclusive global financial system. If there are suspicious BTC trades, the social media giant is hounded by privacy issues.
Facebook executives will appear in back-to-back congressional hearings before the U.S. House Financial Services Committee and the U.S. Senate Banking Committee scheduled for July 16 and 17. The chairman of the House committee is calling for the suspension of the Libra project.
Regardless of the uncertain future of Facebook’s stablecoin and prospects of another spectacular collapse by Bitcoin, blockchain technology will advance. HIVE Blockchain Technologies can rise in value over time and be the top blockchain stock available.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Fool contributor Christopher Liew has no position in any of the stocks mentioned. David Gardner owns shares of Facebook. Tom Gardner owns shares of Facebook and Mastercard. The Motley Fool owns shares of Facebook, Mastercard, PayPal, and Visa. Mastercard is a recommendation of Stock Advisor Canada.