Facebook’s unveiling of its Libra coin earlier this week has divided both traditional finance markets and crypto enthusiasts, as many find themselves on the fence over what impact the social media giant’s flagship cryptocurrency could really have.
Facebook’s mission for Libra?
“A simple global currency and financial infrastructure that empowers billions of people.”
Barry Silbert, the CEO of crypto VC firm Digital Currency, took to Twitter to say the launch of Libra would go “down in history as the catalyst that propelled digital assets (including Bitcoin) to mass global consumer adoption.”
Blockchain advisory DigitalX head of product David Beros said while there were certainly many benefits Libra could bring to the payments industry, it was important to keep in mind the core foundation crypto was built on; decentralisation.
“Libra is far from what most in the industry would call decentralised, in its current state it’s a permissioned blockchain with Facebook retaining a lot of centralised control,” said Mr Beros.
[click_to_tweet tweet=”“If Libra is successful, Facebook could potentially expand its personal data reach from your photos, friends and interests, to your financial transaction history and purchase patterns’ – DigitalX head of product, David Beros. ” quote=”“My main concern is what it means for privacy and surveillance. If Libra is successful, Facebook could potentially expand its personal data reach from your photos, friends and interests, to your financial transaction history and purchase patterns.”]
“Data is one of the biggest modern day commodities, this latest move by Facebook is gearing up to monopolise even more of the sector.”
So, what is Libra?
Libra will be a virtual currency fully backed by a reserve of real assets – what the whitepaper describes as a “basket of bank deposits and short-term government securities”.
Users can store and send Libra to each other via Facebook’s newly formed subsidiary Calibra, in what Facebook has said will be “as easily and instantly as you might send a text message and at low to no cost.”
Energy trading company Power Ledger’s co-founder and executive chairman Jemma Green also sees the potential for Libra to exponentially increase the acceptance of cryptocurrencies in mainstream markets, but has some hesitations.
[click_to_tweet tweet=”“We are yet to truly understand what impact Libra could have on the digital asset ecosystem’ – Power Ledger co-founder and executive chairman Jemma Green. ” quote=”“It’s easy to draw conclusions that there could be some correlation between Facebook’s Libra announcement and Bitcoin’s recent price increases, however, we are yet to truly understand what impact Libra could have on the digital asset ecosystem,’ said Dr Green.”]
“Cryptocurrencies are built on transparency and decentralisation, Facebook has had well documented issues maintaining both of these in the past. I’ll be interested to see if Facebook will make friends with the existing companies or seek to box them out completely.”
While some industry players see the huge potential of Libra in progressing the take up of cryptocurrencies, others have their reservations.
The United States’ Senate Banking Committee has already announced it will hold a hearing on July 16 to ask Facebook more questions about Libra.
Libra will be governed by the Libra Association, an independent non-profit membership organisation headquartered in Geneva, Switzerland.
The association has already recruited a range of members, including Uber, Mastercard, PayPal, Visa, which have invested about US$10 million each to fund and govern Libra.
Telecommunications giant Vodafone Group, music streaming platform Spotify, venture capital firm Andreessen Horowitz and nonprofit organisation Women’s World Banking are also listed as members in Facebook’s whitepaper.
Facebook plans to have enlisted approximately 100 members by Libra’s target launch in the first half of 2020.