Donald Trump doesn't like cryptocurrencies. The US president took to Twitter to lambast bitcoin and its ilk. "I am not a fan of Bitcoin and other cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air."
It’s not the first time that someone has expressed criticisms of digital currencies, but drawing the ire of the US president is probably the most high-profile incidence of it. Trump has history here; he previously banned US organisations from doing business using Venezuela’s petro.
But Trump wasn't pulling his opinions from the air. He was echoing Fed chairman Jerome Powell, who described Bitcoin as a speculative store of value that had failed to catch on.
Image issues
Cryptocurrencies still have to prove themselves to a certain extent. Bitcoin has image issues – not only was it used for less than legal transactions in the past but it also went through a majorly volatile period that saw more than half its value wiped – and while other coins such as ethereum, litecoin and ripple have all made their mark.
Now Facebook is looking to get in on the act with its recently announced libra. Apparently that has been a step too far for Trump, who felt compelled to air his views on Twitter.
“If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks, both National and International,” he continued.
Dollar protection
The responses to his words varied. While some – notably one of the architects of cryptocurrency ethereum – agreed with Trump’s opposition to Facebook’s involvement in the sector, others claimed Trump was simply trying to protect the status of the US dollar, and saw cryptocurrencies as a threat to that.
That Facebook is looking to break into digital currencies with libra is an indicator that the technology is becoming more mainstream. But the crucial thing that Trump appears to have missed is that libra is designed to be low-volatility. Rather than aspiring to the swings of Bitcoin, libra is hoping to be more of a utility coin than some of its peers.
Whether Facebook will be allowed to go ahead with its plans remains to be seen.
But will Trump be on the wrong side of history on cryptocurrencies? If so, it wouldn’t be the first time he’s been wrong. It’s unlikely to be the last.
