Bitcoin jumped to an 18-month high on Wednesday, as investors were encouraged by prospects that Facebook & # 39; s Libra token could push cryptocurrencies to the mainstream.
Facebook announced Libra last week and said it would launch digital runners by June 2020, supported by a basket of government-issued currencies as a means of exchange for users.
But unlike Bitcoin, which works on a decentralized blockchain, Facebook's cryptocurrency will work on a private ledger, making the company a sort of de facto central bank.
That has caused some critics to speculate that Facebook is trying to seize powers that are normally reserved for national governments.
Facebook announced Libra last week, saying it would launch the digital tokens by June 2020, supported by a basket of government-issued currencies & # 39; s
& # 39; (T) the majority of Libra users will be in what is essentially a closed network under the full control of one CEO slash – & # 39; emperor for life & # 39;, & # 39; Mark Zuckerberg, wrote Molly Wood in a new column for Wired.
Wood pointed out that around 350 million people around the world use the US dollar as a primary means of exchange, but that even with partial acceptance by 2.7 billion users (including subsidiaries WhatsApp and Instagram), Libra could quickly surpass the dollar.
Although Facebook says Libra is controlled by an independent partner body in Switzerland, Facebook's subsidiary, Calibra, will manage the cryptocurrency for Facebook users, with the company hoping that most users will be accepted.
& # 39; These are government-level ambitions, in whatever way & & # 39 ;, Wood writes. & # 39; (I) In the case of Facebook, you have to admit that it looks like it will be a boundless pseudo-state. & # 39;
Facebook director Mark Zuckerberg wants & # 39; emperor for life & # 39; become his own & # 39; boundless pseudo-state & # 39 ;, wrote a critic in a new column
But for the moment Bitcoin remains the world largest cryptocurrency and has increased in value since April. On Wednesday, Bitcoin hit a $ 13,666.02 peak on the Bitstamp exchange, the highest level since January 2018.
So far this year, bitcoin has risen more than 260%, although it remains below its highest point of nearly $ 20,000 in December 2017.
Bitcoin lasted 14.7% at $ 13,475.
Investors returned to digital currencies after a blood deposit in 2018. Bitcoin has risen for eight consecutive days.
Analysts say that Facebook & # 39; s Libra announcement has revived interest in digital currencies this month, while investors looking for security have also raised the price of bitcoin.
& # 39; Cryptocurrency traders were revived by Facebook launching its own digital currency and the momentum seems to be fueling new, new investors & # 39 ;, said Edward Moya, senior market analyst at online FX broker OANDA in New York.
& # 39; Bitcoin skeptics are cautious in trying to stop this wave and can look for the next important resistance level of $ 15,000, & # 39; he added.
Now that key central banks have kept interest rates close to lows, investors have been looking for ways to diversify their portfolios, including through cryptocurrenia, analysts say.
The Bitcoin CME futures volumes have also increased in recent days as investors look for ways to get hold of the currency through the derivatives market.
Traders who have access to both spot and futures markets have bought the spot and sold the futures, arbitrating the two prices, said Michael Moro, chief executive officer at Genesis Global Trading, who offers on-the-counter digital currency trading for institutional investors. investors.
The cryptocurrency has risen by 150% since the beginning of May, along with large increases in other smaller digital currencies such as Ethereum & # 39; s ether and Ripple & # 39; s XRP.
& # 39; It should be noted that this is a very different market today than in 2017, & # 39; said Moro.
& # 39; In 2017 there was an overwhelming number of ICO & # 39; s (initial offer of coins), which was very distracting. 2019 has less distraction. It is also another space because the CMES bitcoin futures product was only available in December 2017. & # 39;
ICO & # 39; s refer to a fundraising plan that bypasses banks and venture capital companies and where startups create their own tokens and sell them to the public.
WHAT CAN WE KNOW ABOUT THE FACEBOOK SCALE?
What is Libra?
Libra is the name of the new cryptocurrency that Facebook will launch in 2020 and that will be used in circulation to purchase the service digitally from a user's smartphone.
The digital currency is stored in a digital portfolio called Calibra, an independent app on a user's smartphone or housed in Facebook-owned services such as WhatsApp and Messenger.
It is supported by Visa and Mastercard, but also by companies such as Uber, Spotify and eBay. Ultimately, users can use the currency to pay for almost anything, from their weekly shopping to an Uber trip or their Spotify subscription.
How does cryptocurrency work?
Cryptocurrencies are fully digital forms of money that use encryption to carry out transactions securely and in many cases anonymously between two parties, which according to many is safer against fraud.
An important advantage of cryptocurrency is also that it is decentralized, meaning that no entity manages the currency as opposed to how a central bank controls the traditional currency.
The & # 39; s currencies are often built on blockchain networks, a type of digital ledger technology where all transactions are publicly verified and recorded and cannot be changed – create an information flow and improve transparency.
How is Facebook different?
The two biggest problems for cryptocurrency so far, according to Facebook, are scalability and volatility. For example, Bitcoin has seen its price fluctuate strongly in recent years because the price is linked to supply and demand.
However, scales must be supported by a reserve of assets – including links with different international currencies – from a number of central banks to keep pricing stable.
The developers have said that launching via Facebook apps also makes it directly accessible to more than two billion people worldwide – the number that use a Facebook app every month.
How can users buy Libra?
When the Calibra wallet for Libra is started, those who want to use it must sign up for an account with a government-issued ID.
Users can then convert their money into Libra and add it to their digital wallet. Once in place, the currency can be used to pay for & # 39; everyday transactions, such as buying a cup of coffee, buying groceries, or taking public transportation & # 39 ;.
Facebook initially said that the new payment system will support peer-to-peer payments between individuals, as well as some other ways to pay for goods and services – for example, by scanning a QR code.
The system will eventually be expanded with integration into cash register systems in stores, making it possible to make payments in the store that work in the same way as paying with a debit card or credit card or using them without contact.
Because it will also be built into WhatsApp and Facebook Messenger, users can also send and receive money between their friends and families by sending them a message.
This will also work with all companies that they communicate with on these platforms, Facebook said.
When will it be available?
Still completed in its development, Libra's full system and its Calibra digital wallet are expected to start next year.
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