There’s been a lot of talk about Facebook’s new cryptocurrency lately, and people tend to fall into two camps when it comes to Zuckerberg’s foray into the industry.

Libra will allow people around the world to send and receive remittances without exorbitant fees and pay for goods and services without having a bank account. With 2.3 billion users worldwide, Libra could even be the catalyst for mass adoption of cryptocurrencies in general.

But what about Libra vs Bitcoin? Can they really be compared?

Libra vs Bitcoin is comparing apples and oranges

Comparing Libra vs Bitcoin is like comparing apples and oranges. As the world’s first cryptocurrency, Bitcoin has many qualities that Libra can’t hold a candle to. Facebook may be using the term “cryptocurrency”, but being regulated and managed by central authorities is the antithesis of Bitcoin, which removes the need for an intermediary.

As blockchain advocate and policymaker in Wyoming state Catlin Long said:

Libra will not compete with Bitcoin. It is not a peer-to-peer method of transferring value and it’s not really a store of value either. There are few people who will trust Facebook with their money more than they do a bank.

Since Libra will be a stablecoin pegged to a basket of fiat currencies, it will counter Bitcoin’s volatility and be more effective as a means of payment. This makes Facebook’s main competitors remittance services like Western Union, high-fee payment platforms like PayPal, and even the banks.

Libra – if it isn’t blocked, banned, or highly censored – will probably be good in the end for Bitcoin. When people start to understand what a cryptocurrency is and how it works – and that they can use it to circumvent the banks, governments, and corporations – it will eventually bring people over to Bitcoin.

Libra vs Bitcoin – managed exchange rates

Another key difference between Libra and Bitcoin is that Bitcoin opts for unmanaged exchange rates. There is no central banker that can just control the currency and prevent its gut-wrenching volatility. Libra, as a stablecoin, will not experience volatility, but it will always need an entity in the middle controlling the rates.

Bitcoin may not be able to pull the strings and control the exchange rates, but it does make capital entirely portable and permissionless. Facebook’s Libra will never be fully permissionless as there will always be the need for a central party to control the fiat currencies that back the coin.

Yes, Bitcoin may be volatile as new adopters enter the market and its inelasticity translates into rampant price hikes, but it’s free from any third parties and achieves an independent monetary policy. Libra most certainly cannot claim to do the same.

Bitcoin has a capped supply, Libra does not

Facebook’s Libra may act as the gateway drug to Bitcoin. As Bitcoin maximalist Max Keiser calls it, Libra may be Satoshi’s “useful idiot”.

The social media giant will overcome issues of usability and education and introduce new eyes to crypto. But as users start to understand how they work, that’s when they’ll move over to Bitcoin.

It could be when their Facebook account gets shut, a country bans Facebook payments, or simply when people realise that Bitcoin’s capped supply creates monetary scarcity, which in turn creates lasting value.

They will understand that the system of perpetual issuance that Libra, fiat, and other altcoins opt for is not an effective means of storing their wealth.

Bitcoin has a nondiscretionary monetary policy

Unlike fiat currency or Libra, Bitcoin doesn’t enjoy the benefits of following a discretionary monetary policy. This means that it cannot print money out of thin air to finance pointless endeavours or continue to dilute the worth of the national currency.

The network cannot make more Bitcoin to continue to fund miners and will have to tackle the issue of whether the network can be sustained by transaction fees when all the Bitcoins are mined. There are no middlemen – no humans – who can use their discretion to print more and erode wealth for all.

Bitcoin is built to last, Libra is a last-ditch attempt to stay relevant

Libra may have become the latest whipping boy for many, but it’s no secret that Facebook is losing its user base fast in developed countries. It’s interesting that the corporation recognises this fact in its white paper and will be focusing mainly on developing countries.

However, developing countries will become developed at some point. Facebook’s social media platform dogged with privacy problems and data scandals is unlikely to get a developed user base trusting it (and every central authority) with all their financial information forever.

Bitcoin, on the other hand, is built to last and is censorship-resistant. Libra vs Bitcoin? No, they can’t be compared, but they may be able to complement each other – at least in the beginning.

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