A key factor to consider: Libra has intrinsic value but Bitcoin doesn't.
From libra.org: "Libra is fully backed by a reserve of real assets. A basket of currencies and assets will be held in the Libra Reserve for every Libra that is created, building trust in its intrinsic value."
Fixed supply is a fatal design flaw of Bitcoin which leads to it not likely having any intrinsic value ever. Let me explain:
1. Fiat money's intrinsic value: A homeowner who borrows against their home is guaranteed to get full control of the home when they deliver the amount they owe, which is denominated in fiat. It is a powerful incentive to exchange goods and services for fiat. Even for participants who don't owe fiat, knowing that the fiat is intrinsically valuable to debtors means that it can be used to purchase goods and services from them.
2. There is no such incentive behind Bitcoin. Negligible amount of debt is denominated in Bitcoin. If Bitcoin value falls towards zero, there’s no real-economy backed mechanism to bring it back. There is no contractual guarantee that spending X amount of Bitcoins can entitle the purchaser to receive Y amount of services.
3. Bitcoin will likely never be a debt instrument. Bitcoin has a fixed supply, and the design goal of this is for Bitcoin to be deflationary. If there’s an equilibrium interest rate in Bitcoin, that rate is highly likely to be negative and more than the cost of owning Bitcoin. This removes incentives for Bitcoin holders to lend out the currency, consequently there will be no debt, and no contract that allows debtors to receive real goods by delivering Bitcoins.
This argument applies to most non-stable cryptocurrencies. From this reasoning alone, I see Libra has a much higher chance to succeed than its crypto peers.
Not being able to generate debt denominated in Bitcoins is a design goal, and I feel, possibly a good one (if too idealistic).
Fractional reserve banking lends too much power in to the hands of those who control the process. Fractional reserve is impossible in Bitcoins (unless you trust the word of the other party). This doesn't mean loans or debt can't exist, but it is not denominated in Bitcoins, but just as records on paper. And you also cannot loan out Bitcoins you don't own (nor loan out nonexistent Bitcoins like you could with fiat). This leads to more responsible lending, and cuts speculative gambling with assets. I think in the long run, this is a good thing (even though it would hurt in the short term).
From libra.org: "Libra is fully backed by a reserve of real assets. A basket of currencies and assets will be held in the Libra Reserve for every Libra that is created, building trust in its intrinsic value."
Fixed supply is a fatal design flaw of Bitcoin which leads to it not likely having any intrinsic value ever. Let me explain:
1. Fiat money's intrinsic value: A homeowner who borrows against their home is guaranteed to get full control of the home when they deliver the amount they owe, which is denominated in fiat. It is a powerful incentive to exchange goods and services for fiat. Even for participants who don't owe fiat, knowing that the fiat is intrinsically valuable to debtors means that it can be used to purchase goods and services from them.
2. There is no such incentive behind Bitcoin. Negligible amount of debt is denominated in Bitcoin. If Bitcoin value falls towards zero, there’s no real-economy backed mechanism to bring it back. There is no contractual guarantee that spending X amount of Bitcoins can entitle the purchaser to receive Y amount of services.
3. Bitcoin will likely never be a debt instrument. Bitcoin has a fixed supply, and the design goal of this is for Bitcoin to be deflationary. If there’s an equilibrium interest rate in Bitcoin, that rate is highly likely to be negative and more than the cost of owning Bitcoin. This removes incentives for Bitcoin holders to lend out the currency, consequently there will be no debt, and no contract that allows debtors to receive real goods by delivering Bitcoins.
This argument applies to most non-stable cryptocurrencies. From this reasoning alone, I see Libra has a much higher chance to succeed than its crypto peers.