During a phone interview with CNBC’s morning news and talk program “Squawk Box”, Mike Novogratz, a former Goldman Sachs partner, as well as Founder and CEO of crypto-focused merchant bank Galaxy Digital, said that Facebook’s project Libra was “stunningly important” for the entire crypto space.
Novogratz said one of the things that has been driving up the price of Bitcoin recently has been the excitement around Facebook’s entry into the crypto space, and Facebook’s Libra announcement earlier in the day had just legitimized the idea of cryptocurrencies.
He further explained that although some institutional investors, such as the Yale endowment or the Harvard endowment, have already started investing in crypto, this announcement would “just accelerate the movement” because before the main concern of institutional investors was “if I invest, I might look stupid” and now, it’s going to be “if I don’t invest, I might look stupid.”
When asked if he was going to sell Facebook stock and buy Bitcoin instead, Novogratz explained that with project Libra, it was important to note that there are two types of coins/tokens:
- “the main coin, Libra (LBR), which will be the payments coin”; he referred to Libra as a “stable-ish” coin (Facebook itself admits that Libra is more of a low-volatility cryptocurrency than a pure stablecoin) that is “tied to a basket of currencies”; this would be traded for goods/service, but “there wouldn’t be a great speculative trade on it”
- “a security token” (the Libra Investment Token), which represents “ownership in the central bank”; he said that this is the one that investors would probably want to go long on
Asked why this announcement about project Libra is helping Bitcoin since Facebook specifically had chosen not to use Bitcoin for this project.
Novogratz pointed out that recently people have been thinking of Bitcoin more as a store of value (i.e. digital gold) than as a means of exchange (i.e. for payments), and that what is interesting about the announcement is that it “credentializes the whole space.” And what do institutions usually first buy when they want to invest in crypto? Bitcoin.