The executive in charge of Facebook’s cryptocurrency projects said he sees bitcoin as “digital gold,” and while its extreme volatility remains an obstacle to it being used as a medium of exchange, it “serves a completely different purpose.”
“I don’t think of bitcoin as a currency,” David Marcus said, speaking at the New York Times DealBook Conference last week, Forbes reported. “It’s actually not a great medium of exchange because of its volatility. I see it as digital gold.”
He is not the first to make a comparison between bitcoin and gold. Some prominent industry figures, including entrepreneur Bobby Lee and Galaxy Digital’s Mike Novogratz, believe the leading digital currency could eventually surpass gold’s $8 trillion market value.
The total value of all bitcoin is currently about $157 billion, which is about 50 times less than gold.
Bitcoin and cryptocurrency market watchers had hoped prices might begin to stabilize as the market matured but that has failed to happen. The cryptocurrency remains much more volatile than traditional currencies, commodities, or company stocks.
The bitcoin price, which was heavily sold off last year, made a strong comeback through the first half of 2019, largely due to reports that technology companies were beginning to see the merits of bitcoin and crypto.
After Facebook unveiled its plans for libra, a bitcoin rival, seen by many as a tacit endorsement of bitcoin and blockchain technology, bitcoin’s latest bull run stalled as investors worried that it could lead to increased regulation, the Forbes report said.
US President Donald Trump was among world leaders, politicians and regulators who publicly opposed Facebook’s libra plans, with some of them asserting that it could encourage criminal activities and undermine central bank control of the economy.
Facebook said it would like to work with the world’s regulators and governments to make libra a reality and has distanced its project from bitcoin and other existing cryptocurrencies.
Marcus said, “[Bitcoin is] an investment class that’s decorrelated from the rest of the market. Why feel threatened by that?”
He added, “People don’t use bitcoin to pay for things just because it’s so volatile. It serves a completely different purpose.”
Facebook’s libra digital currency project, which was unveiled earlier this year, is intended to be primarily used in parts of the world with less developed financial infrastructure.
However, the social media giant’s plans have unraveled somewhat since June, with some of the original 28 companies assembled by Facebook to form the Libra Association abandoning the group and Facebook’s chief executive Mark Zuckerberg facing criticism from US senators.