“In the room, filled with about 100 experts and media who closely track the sector, about two-thirds of participants raised their hand to express distrust at the upstart currency.”
This came from ChannelNewsAsia where they reported that Facebook’s Libra is under fire for its questionable existence. Facebook recently announced Calibra, it’s financial subsidiary service. And Calibra will introduce its own digital wallet where people can put Facebook’s own version of a digital asset called Libra. They expect to launch by 2020. And it’s received some interesting feedback from authorities, crypto skeptics and enthusiasts alike.
Is Libra Really Cryptocurrency?
While the term cryptocurrency is being thrown around, Libra hardly fits the definition of cryptocurrency. CoinDesk proposes that Libra is a new form of digital asset. And by looking through definitions, we can see their point.
First, a cryptocurrency functions on a decentralized platform we call “blockchain”. While Libra uses blockchain, it functions otherwise. It will be overseen by major companies alongside Facebook. This includes Ebay, Spotify, Paypal. Mostly major companies who have their own audience. Although Facebook did promise to move into a decentralized platform in the future, how and when isn’t necessarily clear. But for now, Libra will have a collective central authority to carry on its transactions.
Second, the Libra token isn’t really considered cryptocurrency. The only similarity Libra has with other cryptocurrencies like Bitcoin, is it’s based on blockchain. But Libra’s wasn’t built on the same mathematics or protocols with other crypto. Libra’s value is determined by a collective fiat. So basically, it’s value is based on the value of traditional fiat. And this would make Libra a token representation of it, and not cryptocurrency itself.
While some would see it as a stablecoin like Tether, stablecoins are pegged to a real world asset. Noelle Achenson from CoinDesk describes Libra as “a basket of bank deposits and short-term government securities” with an emphasis on government securities. This premise made her define Libra as an ETF (exchange-traded fund) rather than a stablecoin.
How Libra Can Affect Cryptocurrency Adoption
And while the Libra debate about its use goes on, some crypto watchers say this new digital asset can help the mainstream understand cryptocurrency. With around 30% of the population using Facebook, Libra can attract audiences for crypto, along with the fact that Libra works with Mastercard, Paypal, Spotify, and Uber. The community of Facebook would have an easier access to understanding the world of crypto since Facebook is already something familiar or something people somehow trust.
When asked in a survey if people would invest into Libra, 18% said yes. That means interest is relatively high. Considering 91% of respondents said they have never invested in crypto. If it’s any indicator, Libra can be a big step towards mainstream use that cryptocurrency and blockchain has been looking for.
Facebook Libra Haunted By Privacy Concerns
But this doesn’t mean that Libra hasn’t garnered backlash. Considering blockchain is all about transparency, privacy, and security, Libra is haunted by Facebook’s past scandals. In the audience of experts at FinTech, two-thirds expressed distrust with Libra. Helen Disney from Unblocked Events said the philosophies and perspectives of crypto lovers tend to lean on libertarian. They want blockchain to give power to the people. They want trust and control over their data. Which isn’t what Libra is exactly doing.
With the Cambridge Analytica scandal, the form of digital assets, and the control of major companies, some experts state that Libra may not really introduce cryptocurrency to the masses. But instead, it will just reform whatever system we now. Just, digitalized.
Authorities Weigh In on Libra
As most blockchain concerns we’ve had in the past, Libra faced the same thing. Authorities have called to stop development of Libra.
In an article published in TheGuardian, US Congress had this to say:
“The scant information provided about the intent, roles, potential use, and security of the Libra and Calibra exposes the massive scale of the risks and the lack of clear regulatory protections. If products and services like these are left improperly regulated and without sufficient oversight, they could pose systemic risks that endanger US and global financial stability.”
While some experts say that Libra will force the government to give a definitive regulation for cryptocurrency, authorities and skeptics are weighing in the possible outcomes if this project fails. Not only does the past catch up with Libra, but should this project fail, it could totally repel any interest in crypto or blockchain in the future.
Facebook Promises Security With Libra
Facebook, on the other hand, promises to respect privacy. Developers have stated that the platform would not sell any data to anyone unless the required information is under law or authorities. All timestamps and transaction data will be public and transparent, allowing users to transaction pseudonymously.
And since wallets will store data, this means Facebook will not store data. Lead developer David Marcus had this to say regarding the issue:
“The Libra Association will work with policymakers and regulators to make sure this new ecosystem is a value-add to economies, that consumers are protected, and that the role of government oversight and central banks is appropriate. The Association is fully committed to advancing the global dialogue on how blockchain and cryptoassets should be regulated.”
The Irony of Innovation—The Future of Libra Coin
Technological innovation doesn’t always pan out the way it was initially invented for. Blockchain and cryptocurrency has long carried a flag on decentralization, data transparency, and digitalization of everything. The dialogue Libra is starting isn’t more than just ordinary kindling. It’s allowing discussion that crosses boundaries for technology and blockchain. And as expected, everyone is watching over Libra. And who wouldn’t? There’s a lot of expectations from the project. It’s too big and too important for people to turn the other cheek.
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