Bitcoin Could Go Down Like VHS Competitor Betamax, Says Tech Investor

  • Prominent tech investor Glenn Hutchins argued bitcoin could lose its dominance to another cryptocurrency, like Betamax lost to VHS.
  • Currently, bitcoin is still the dominant cryptocurrency with 36.5 percent of the ecosystem’s market share.

Glenn Hutchins, one of the biggest tech investors to venture into the cryptocurrency world, has recently argued bitcoin, the flagship cryptocurrency, could be pushed out by competitors in the future, much like video cassette tape format Betamax lost to rival VHS.

Speaking at CNBC’s “Squawk Box,” the tech venture capitalist stated that “bitcoin could turn out to be Betamax,” referring to Sony’s home entertainment technology Betamax, which battled JVC’s VHS over which device would be used to record and watch videos and movies. VHS eventually won the battle, with Sony officially ending Betamax shipments in 2015.

Hutchins, a director at AT&T and an investor in various cryptocurrency startups - including Abra, Circle, and Ripple - claimed he believes it’s likely one cryptocurrency will eventually prevail, just like VHS. The winner, he said, could be an altcoin like Ripple’s XRP, litecoin, or ethereum.

Hutchins was quoted as saying:

"The token of exchange at the heart of the math solution that leads the technology will be there. Different tokens will be used for different applications."

Glenn Hutchins

The tech investor isn’t the only one seeing one cryptocurrency rise above others. Former Goldman Sachs President Gary Cohn, as covered, recently predicted a global cryptocurrency, but asserted it won’t be bitcoin. This global cryptocurrency, he claimed, won’t be “based on mining costs and costs of electricity and things like that.”

Similarly, Hutchins has in the past claimed bitcoin suffers from several “serious issues,” referring to how “expensive and energy-intensive it is to mine.” To him, bitcoin isn’t digital gold, but a utilitarian metal. He stated:

"I think it's more like copper, like an industrial metal that's used for a purpose to drive an outcome. There will be a token that's used just like there's an industrial metal that's used for wiring."

Glenn Hutchins

At press time, bitcoin is still the dominant cryptocurrency, as it has 36.5 percent of the ecosystem’s market share. Ethereum, the next biggest cryptocurrency, is at 17.3 percent, while Ripple’s XRP is at 7.2 percent.

BBC: Facebook Planning to Launch ‘GlobalCoin’ in Q1 2020

Siamak Masnavi

Social networking giant Facebook is planning to launch its own cryptocurrency (internally dubbed "GlobalCoin") and crypto-powered global payments network (internally called "Project Libra") worldwide by Q1 2020, according to a report published earlier today by BBC News, the world's largest broadcast news organization.

Project Libra's Origin Story

  • 8 May 2018: In a post on Facebook, David Marcus, the former head of Messenger, who was at that time also a board member (since December 2017) of crypto exchange Coinbase, revealed that he was leaving that role to set up a new group focused on exploring applications of blockchain technology across the whole of Facebook.
  • 13 December 2018: Cheddar reported that Facebook’s blockchain group is planning to "potentially disrupt the entire payments industry":

"At a private dinner Facebook hosted during a recent crypto conference, one attendee told Cheddar that Facebook employees pitched the idea of creating a decentralized digital currency for the social network’s 2 billion users."

  • 21 December 2018: Bloomberg reported that Facebook was creating its own cryptocurrency (a stablecoin) for money transfers within its highly popular messaging app WhatsApp.
  • 28 February 2019: The New York Times confirmed Bloomberg's earlier story, and said that, according to its sources, this project was "far enough along that the social networking giant has held conversations with cryptocurrency exchanges about selling the Facebook coin to consumers."
  • 8 April 2019: Nathaniel Popper, one of the two journalists who wrote the report in the New York Times, provided this update (on Twitter) about Facebook's cryptocurrency project:
  • 2 May 2019: The Wall Street Journal reported that Facebook was "recruiting dozens of financial firms and online merchants to help launch a cryptocurrency-based payments system," and that the core part of this initiative (code-named "Project Libra") is "a digital coin that its users could send to each other and use to make purchases both on Facebook and across the internet." Furthermore, this report said that, according to people familiar, Facebook was talking to "financial institutions including Visa Inc., Mastercard Inc. and payment processor First Data Corp." about investing in this project.
  • 17 May 2019: A report by Reuters said that FinTech company Libra Network was registered in the Republic and Canton of Geneva on May 2. Looking at the entry for Libra Networks, which was published on May 7 in the Swiss Official Gazettte of Commerce (SOGC), tells us:
    • Libra Networks LLC (registration number: CHE193533388) has its registered office in Geneva.
    • According to the English translation, the stated purpose of this company is "provision of services in the fields of finance and technology, as well as the development and production of related software and infrastructure, particularly in connection with investment activities, the payment operation, the financing, identity management, data analysis, big data, blockchain and other technologies."
    • The share capital is CHF 20,000 (100 shares, each with a nominal value of CHF 200); all of the shares are owned by Facebook Global Holdings II, LLC.

Facebook's Stablecoin: GlobalCoin

Here is what we have learnt from the BBC News report:

  • Facebook "is planning to set up a digital payments system in about a dozen countries by the first quarter of 2020."
  • The plan is to start testing the new cryptocurrency (some kind of stablecoin), GlobalCoin, by the end of 2019.
  • Facebook has been getting "advice on operational and regulatory issues" from the UK's central bank governor Mark Carney (whom Facebook founder and CEO Mark Zuckerberg reportedly met in April) and from U.S. Treasury officials.
  • Facebook is also in talks with global remittance firms such as Western Union "as it looks for cheaper and faster ways for people without a bank account to send and receive money."

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