David Marcus is leading up Calibre, Facebook’s cryptocurrency project. As reported by CNBC, he said Wednesday that Bitcoin is digital gold, and not a good currency for transactions.
“I don’t think of Bitcoin as a currency,” Marcus told an audience at the New York Times DealBook Conference in New York. “It’s actually not a great medium of exchange because of its volatility. I see it as digital gold.”
One can hold gold, he said. “It’s a very popular thing to hold right now, and you can hold bitcoin, which is a good corollary, a digital version, but it’s not a good medium of exchange.” He notes that families sending remittances across borders can’t afford a 10-20% drop per day when they send money across borders.
“People don’t use a unit like digital currency like bitcoin to pay for things because it is so volatile,” he said. “It services a completely different purpose.”
Marcus said is better for long-term holding, not spending –– he cites the digital currency’s volatility. This proclivity towards being a store of value, and not a medium of exchange, is one reason why regulator’s have not outlawed Bitcoin, Marcus suggested.
“I think it has survived now for eleven years,” said Marcus. “And it has gone through a lot. I think the main reason it has not been regulated into oblivion is really the fact that it is not perceived to be a medium of exchange and as a result if you look at it as a way to invest your money, it’s an investment class that’s decorrelated from the rest of the market.”
There’s no reason for regulators or financial incumbents to feel threatened by that. “It boils down to whether it’s a really good medium of exchange that hundreds of millions, billions, of people are going to use or not.”
He added: “People don’t use a unit like digital currency of Bitcoin to pay for things just because it’s so volatile,” Marcus said. “It serves a completely different purpose.”
He does see how Libra could increase interest in Bitcoin. “Of course, having more people with [digital wallets] will enable and give people more access to bitcoin and other digital currencies.”
The Libra cryptocurrency is most similar to a specific breed of cryptocurrency: stablecoins. Libra’s value is tied to currencies, such as the U.S. dollar and the Euro. These pegs are designed to ensure the digital currency’s stability.