Bitcoin political winds shifted as Facebook’s crypto crumbled
Few US politicians are this clearheaded about Bitcoin
AbraSa/Shutterstock and Adobe modified by Blockworks
This is a segment from the Supply Shock newsletter. To read full editions, subscribe.
Six years is certainly a long time in crypto. But Libra (later Diem) might’ve felt right at home in the current agreeable atmosphere in the US.
Back then, Meta (still Facebook) had its own blockchain subsidiary, Calibra, that was pushing to launch a new type of cryptocurrency pegged to a basket of various fiat with a floating value.
The Calibra wallet was meant to be integrated with WhatsApp and Messenger and promised to let users send money to each other with practically zero fees. Libra, the token, was also intended to be used for e-commerce on Facebook.
Libra was mostly styled as a crypto-powered competitor to PayPal — former PayPal President David Marcus was leading the effort — but rhetoric would often sneak in.
Bitcoin was supposedly “not a good medium of exchange … because [fiat] currency is actually very stable and bitcoin is volatile,” Marcus told Fox Business, which, to be fair, maps to what Peter Todd told Pete Rizzo at Permissionless IV last month.
Trustlessness still stands for something. While the so-called Libra Association intended to diversify responsibility away from Facebook and onto corporate backers including Mastercard, Visa, PayPal and Uber, the Senate Bank Committee had deep concerns.
Granted, longtime antagonist Sherrod Brown led the grilling on this day in 2019, and he’s no fan of Bitcoin, either. But the notion was that Facebook couldn’t be trusted to handle user bank accounts — their finances — in any capacity at all, particularly in light of the Cambridge Analytica scandal which had broken the previous year.
It took then-North Carolina Rep. Patrick McHenry to make it explicitly clear why Bitcoin was so innovative in the first place.
McHenry was averse to the way in which Facebook was railroaded into defending libra while it was still in a conceptual phase. But when asked about whether the US government may or may not allow alternative currencies — be it bitcoin, libra or stablecoins — to flourish without strict guardrails, McHenry had this to say on CNBC Squawk Box:
“Well, I think there is no capacity to kill Bitcoin. Even the Chinese with their firewall and their extreme intervention in their society could not kill Bitcoin…but the new iterations of this that are trying to mimic it, that are not fully distributed, that are not fully open, there are different mechanisms to kill it.”
Six years (and a few NFT drops) later, Trump would change his tune about bitcoin and start accepting it for campaign donations, culminating in the executive ordering of an official US strategic bitcoin reserve in March.
Jamie Dimon softening his anti-bitcoin stance around the same time might’ve had something to do with it. So too a realization that Bitcoiners were drastically underserved by the Biden administration.
But maybe, McHenry’s comments set the tone — an “a-ha” moment for outsiders to finally understand why Bitcoin.
Get the news in your inbox. Explore Blockworks newsletters:
- The Breakdown: Decoding crypto and the markets. Daily.
- 0xResearch: Alpha in your inbox. Think like an analyst.
- Empire: Crypto news and analysis to start your day.
- Forward Guidance: The intersection of crypto, macro and policy.
- The Drop: Apps, games, memes and more.
- Lightspeed: All things Solana.
- Supply Shock: Bitcoin, bitcoin, bitcoin.
