Analyst: Facebook's Libra A 'Benefit' For Bitcoin, Not A Competitor

Facebook, Inc. FB's upcoming digital currency Libra is a "benefit" for Bitcoin, not a direct competitor, Bart Smith, Susquehanna International Group's head of digital assets, told CNBC Monday.

What Happened

Unlike Bitcoin, Libra is a digital token backed by fiat currency held in global banks, with transactions validated by known payment companies like Visa Inc V, Smith said during CNBC's "Squawk Box" segment.

This makes Libra a "stable coin" that uses blockchain technology to facilitate cross-border transactions.

Facebook can target 2 billion users with Libra, and if a small percentage of people better understand the differences and similarities with Bitcoin, then the original cryptocurrency will benefit from the increased attention, he said.

Why It's Important

Facebook isn't looking to compete with Bitcoin, Smith said; initial details about its cryptocurrency suggest it is looking to compete with Paypal Holdings Inc PYPL's Venmo, the analyst said.

Bitcoin's recent momentum has little to do with Libra, he said.

Rather, many investors were attracted to Bitcoin after it broke through a resistance level of $9,000 and the psychological barrier level of $10,000, Smith said. Another potential reason for the recent momentum: bitcoin miners taking some profit above $9,000 to reinvest in their mining operations.

"Often times we see these headlines, we see the price of bitcoin move and we try to connect the dots where maybe they shouldn't be connected." 

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