Bitcoin, Facebook and the End of 20th Century Money

The two earth-shattering stories of the past two weeks - the launch of the Libra project and the wild swings in the bitcoin market - might seem like unrelated topics.

For the most part, the causal impact of the former on the latter is probably not much greater than that of another oft-noted bitcoin price correlation: the avocado chart.

Whether now or in the future, I believe the arrival of Libra, far from being a competitive threat, will be extremely supportive of bitcoin.

Not only will the looming international debate over Libra elevate the conversation around cryptocurrencies and so draw more people into the most established of them, it also represents a major step toward the kind of world in which bitcoin should thrive.

Whether or not Libra succeeds, it confirms the inescapable reality that international money movements in the digital era will be based on blockchain-like solutions that disintermediate the existing gatekeepers and challenge the bank-and-sovereign money-dominated model of the 20th century.

Bitcoin is not described as "Digital gold" for nothing; it offers a level of censorship resistance and isolation from the politicization of money that the corporate-driven Libra project cannot.

I see mainstream global money movements in the next decade or so flowing through a mix of blockchain-era stable-money services that operate along a centralization-to-decentralization spectrum - from JPMorgan's JPM Coin and the new Swift blockchain project at one end to Libra and more open-standard crypto stablecoin projects such as CENTRE's USDC at the other.

As those grow in usage, the demand for bitcoin as the digital asset hedge of choice will also grow.

More specifically, there is talk of capital flight out of China and Hong Kong, a pattern of behavior that naturally boosts interest in bitcoin if not outright demand.

It's also likely coming from wealthy Chinese businesses and individuals who are simply looking to protect their funds in an uncertain environment, a group that these days includes bitcoin miners.