TOP-5 Forecasts on Libra Impact on Decentralised Finance (DeFi) Industry

At least until today, the Facebook announcement to launch their own cryptocurrency Libra is the most discussed event in the crypto community in 2019. In this article, I will not analyse Libra from a technological point of view, because at least for me there is no technological novelty, but I will make my TOP-5 forecasts of how this project may impact crypto finance or the decentralised finance (DeFi) industry.

#1. More unicorn coins

I think Facebook will be a role model for other super big social networks, messengers, e-commerce, and other online sites with a huge global audience to announce their cryptocurrencies. There is a long list of online unicorns (Amazon, Ebay, Alibaba, LinkedIn, Twitter, Netflix) whose audience reach allows them to create cryptocurrency projects and compete with Facebook. I would predict that there will be more online unicorns who will develop their own crypto. It may mean a bigger adoption of cryptocurrencies and a more competitive environment for new startups as well.

#2. More VC money

Until the Facebook announcement, in general, venture capitalists’ sentiments towards crypto projects were negative. They were extremely sceptical towards coins and tokens in 2018, mostly due to legal issues with financial authorities, scam culture, and the so-called “crypto winter”. This announcement may change perspective because Facebook is a model and a trendsetter for a huge number of venture capitalists. Now, they may start to invest in new crypto projects and finally, the long-awaited institutional money will flow into the crypto finance industry.

#3. New legal fights

In the last few years, we witnessed a war between the crypto community and legacy financial institutions (banks, financial authorities). Now the dynamic is changed as Facebook is a more serious competitor to banks than all cryptos together. I believe that banks will fight against Libra in order to not allow it to create the biggest financial service provider in the world. Thus, I expect more attention from banks to be devotedly opposing Facebook. It will be an extremely hard process for Libra to become globally compliant.

#4. New crypto bubble

Usually, speculative bubbles arise from a combination of good context, speculators’ interests and a new growth narrative. There are a lot of players who would be interested in a new crypto price bubble. Now it is the ideal context for a price bubble as bitcoin price has been rapidly increasing these last months, with only a narrative that was missing. Facebook produced a narrative that cryptocurrencies will be the global future of money and now we might expect a new strong price increase for crypto assets.

#5. More bitcoin demand

Libra has the potential to be the most used cryptocurrency in the world and it will drive mass adoption of cryptos. The censorship free nature of bitcoin has a significant differentiator from Libra as it is hard to imagine that Facebook will not censor access and will start fights with local financial authorities. I predict that Facebook’s Libra will lead to mass adoption of cryptos and thus will bring new users to bitcoin.

About the Author

Sandris Murins is the co-founder of Murin’s startups' studio. We are helping to build crypto startups from scratch for investors, founders and for corporates. My mission is to put teams and investors into the best positions to capitalise on emerging opportunities at the intersection between crypto, decentralised finance and artificial intelligence.