The role of digital currencies in the global economy
Governmental, as well as private organizations around the globe, have different attitudes when it comes how to regulate the crypto currency market. It is one of the most debated issues, and there is no perfect solution. This issue is becoming more visible, and even in the U.S. lawmakers, regulators and private companies are unable to come to an agreement. It is a well-known fact that there is a huge number of cryptocurrencies. However, only a few digital currencies such as Bitcoin and upcoming Libra project attract attention from the lawmakers. This is not necessarily good news for the future of cryptocurrencies.
Facebook’s Libra project and Bitcoin
Investors and people who are familiar with digital currencies know that Libra is facing questions from various regulatory bodies. Facebook, in its latest quarterly report, mentioned several problems connected with the Libra project. Thus, the company warned that it might delay the launch of the cryptocurrency.
There are chances that Facebook might not be able to launch the Libra project at all. According to the original plan, Libra should become available in 2020. However, due to the legal challenges, it is hard to say for sure that Libra’s launch will follow the initial goal. Facebook wrote in its filing with the Securities and Exchange Commission that its project is under scrutiny. It is not the first time Libra faced problems. For example, David Marcus had to face tough questions during his visit to Congress.
Marcus is the head of Facebook’s digital currency project. According to him, this new digital currency will provide alternative payment tool for customers. He stated that Libra is a low-cost and secure alternative for people who can’t afford the traditional methods.
The issues with Libra also affected other digital currencies, including Bitcoin. The price of this cryptocurrency decreased by 2.6% to $9,517 on Tuesday. Litecoin fell by 1.6% to $89,133. The price of another cryptocurrency, Ethereum, also decreased by 3.3% to $205.25. This happened by 04:15 GMT.
Chinese market and digital currencies
China is a typical market when it comes to digital currencies. On one hand, China banned bitcoin exchanges in 2017. On the other hand, several weeks ago the Chinese court recognized cryptocurrency as a digital property. However, it is worth mentioning that 60% of bitcoin’s total computing power is concentrated in China.
The state-owned Bank of China is the world’s fourth-largest bank by assets. This bank created an infographic about the Bitcoin. The purpose of this infographic is to increase awareness about the cryptocurrencies. Also, the bank wants to help people to understand how this industry operates in general.
China has the potential to affect the crypto currency market significantly. Crypto investing might become a profitable business for its vast population. According to several reports, China’s central bank plans to create an official state cryptocurrency.
Digital currencies attract people because they offer a decentralized system. It means that there is no central bank which controls the system. Moreover, cryptocurrencies created by central banks will have a different structure. This might reduce the interest of potential investors. Strict regulations hurt Libra. It is an example that overly regulated cryptocurrencies might create additional problems.