The price of bitcoin rose to $9,469, its highest level in more than a year, just as Facebook unrolled details of its cryptocurrency project. Bitcoin peaked at about $18,000 in late 2017 before dropping to one-fifth of that price. Some cryptocurrency enthusiasts are betting Facebook will act as a gateway to the likes of bitcoin, ethereum and litecoin.
The digital currency project Facebook detailed on Tuesday will take up to a year to become in public available and 2 to 5years to be judged a success, or failure. However even before it became official, the project, called Libra, has been ready to do what seemed impossible: Drag the value of bitcoin out of the doldrums and to a one-year high.
Since March, the value of bitcoin, the best-known virtual currency, has nearly tripled. It hit a high of $9,469 in the evening of June 17 — hours before Facebook unconcealed a white paper detailing Libra, its cryptocurrency project.
That’s the highest price bitcoin has seen in over a year; however it’s nowhere close to its peak. The virtual currency enjoyed a spectacular escalation in 2017, rising 20-fold to $18,000. That climb was followed by an even more dramatic nosedive the following year. By the end of 2018, a bitcoin wasn’t well worth the price it took to mine, and pundits were comparing the virtual coin’s tumble to the collapse of Dutch tulip mania in 1637.
If anyone could turn around that trajectory, it would be the world’s biggest social network. After all, with 2.3 billion users, it’s several hundred times more popular than the most popular crypto coin.
The missing “catalyst”
“This is only going to accelerate the mass usage of cryptocurrency or digital currency. … I believe this is the catalyst everyone’s been trying to find,” said Chris Ligan, vice president of acquisitions for auric, a credit card processing company. “JPMorgan Chase made their huge announcement, and that had barely any effects.
This, this is huge”. Ligan added: “Particularly with Facebook’s marketing announcements. … You see plenty of speculators getting back in the market.”
Still, bitcoin fans disagree on whether or not the latest run-up in its value is a speculative blip or a signal that investors are starting to realize the technology’s true worth.
When you filter out speculative trading, bitcoin’s value is closely linked to how popular its underlying technology is with developers, said Bill Ottman, chief executive officer of Minds, a social platform that pays users in cryptocurrency. “Bitcoin isn’t simply money, it’s infrastructure for web 3.0. You can build applications on top of it. You can build smart contracts.”
Ottman was one of several who suggested that Facebook’s currency — which doesn’t meet the strictest definition of cryptocurrency — would act as a gateway to generate interest in other virtual currencies like bitcoin, ethereum and ripple, which are totally anonymous and not controlled by a central entity like Libra is planned to be.
Jonathan Johnson, president of Medici Ventures, a blockchain-focused subsidiary of overstock.com, said less-volatile virtual coins, like Facebook’s, “are easier for the novice to use comfortably initially.” however over time, he said, cryptocurrencies that are limited in number, like bitcoin, “will store value better and become the cryptocurrencies of choice.”