Bill Barhydt, CEO of Bitcoin investment platform Abra, claims that Facebook staffers told him the company wanted to use Bitcoin as a cryptocurrency to power its payment platforms. But the social media giant had “no choice” except to develop its own cryptocurrency, due to Bitcoin’s inability to scale.
Barhydt made his remarks last week on the What Bitcoin Did podcast, hosted by Peter McCormack, where he emphasized that his assertion was based on conversations with a number of people directly involved with Libra, Facebook’s cryptocurrency payment platform.
Earlier this year, Abra became the first platform to launch fractional-share investing with Bitcoin, and counts American Express Ventures, Foxconn Technology Group and Arbor ventures among its investors.
In the podcast, Barhydt said he had taken part in multiple conversions with Facebook team members, and they told him that their initial goal was not to create a cryptocurrency, but a payment platform, that served their users’ needs.
“Ideally—from my discussions—they actually would have preferred to use Bitcoin. 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.”
Barhydt said that Facebook had considered all the options, including Bitcoin’s scaling solution, the Lighting Network.
“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,” said Barhydt.
He added that this wouldn’t necessarily hold true forever, particularly when the Lightning Network was ready. But he said that Facebook was determined to build a system that was scalable today for payments on its platforms: WhatsApp, Messenger and Instagram.
Earlier this week, Twitter CEO Jack Dorsey took a swipe at Libra, and doubled down on comments that Bitcoin will become the internet’s native currency—and not a commercial alternative.
But while Barhydt admitted that Libra may currently be little more than a private database, he said Facebook had future plans to create something akin to a “scalable Bitcoin.” But “you can’t go fully permission-less out of the gate.”
Perhaps Mark Zuckerberg and Jack Dorsey’s views are more similar than we thought.