- Facebook (FB) actually preferred to use Bitcoin: Abra CEO, Bill Barhydt
- The plan was to create a scalable Bitcoin as anything transactional with BTC was effectively untenable
- Bitcoin consultant, Udi Wertheimer begs to differ
Before going with its own stablecoin Libra, social media giant Facebook (FB) has been considering using Bitcoin, Bill Barhydt, CEO of the Bitcoin Investment platform Abra shared with Peter McCormack, on the What Bitcoin Did podcast.
Instead of creating its own fiat-backed cryptocurrency Facebook apparently wanted to use the leading cryptocurrency to power its payment system. But, Barhydt claims the company had “no choice” but to develop its own digital currency because of Bitcoin’s inability to scale.
His claims are based on his conversation with a number of people that were directly involved in the development of Libra.
Earlier this year, Abra announced the launch of a new way to invest in traditional stocks, commodities, ETF’s using Bitcoin, becoming the first one to introduce fractional-share investing with BTC.
In July, the cryptocurrency investment app restricted its services for US users over
“regulatory uncertainty and restrictions”
in the country.
A Plan for a Scalable Bitcoin
In his multiple conversations with Facebook’s team members, Barhydt got to know about the goal of the company that was to become a payment platform that serves the users’ needs and not to create a cryptocurrency.
“Ideally, from my discussions, they actually would have preferred to use Bitcoin,” he said.
Facebook had plans to create something like a “scalable Bitcoin” but Barhydt said,
“you can’t go fully permission-less out of the gate.”
So, with the problems FB has been trying to solve, Bitcoin, was not going to work for them.
“I think there’s a huge belief in the system. But if you want to build a remittance system and you want to build a cross-border commerce system and you have 1.2 billion users today, what would happen to Bitcoin? Fees would skyrocket. Doing anything with Bitcoin that was transactional was effectively untenable.”
However, Bitcoin consultant, Udi Wertheimer doesn't agree with this. He said, scalability wasn’t the issue, Facebook didn’t want to in the first place.
Facebook according to Barhydt considered all the options including Lightning Network, the second layer on Bitcoin network that aims to solve Bitcoin’s scaling problem.
“These are smart people. They've looked at Lighting, they’ve looked at Bitcoin, they’ve thought this through. And they came to the conclusion that Bitcoin is not optimized to be a payment network, Bitcoin is optimized to be digital cash right now,”
Barhydt said, Facebook, however, had “infinitely” more favorable chance of executing it than any other company.
As for the heightened regulatory scrutiny Libra is facing from regulators all over the world, Barhydt said the company's previous track records are that make it easier for lawmakers to question it.