Since Facebook cryptocurrency libra has been announced, the atmosphere has not been cool for Facebook as petitions fly from all angles to frustrate the financial project.
Initially, when information about Facebook cryptocurrency leaked around May, everyone was expecting Libra to be Facebook currency. But surprisingly, the whole story suddenly changed as the payment technology became what dozens of other world prominent financial, not-for-profit organisations, commerce firms and tech giants came together to own.
That was smart enough for Mark Zuckerberg to slip through, but still couldn’t escape serious criticisms.
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What is Libra Currency?
Libra currency is a proposed permissioned blockchain virtual currency to ease money transfer across borders without the use of a financial bank. The payment technology was created by the American social media conglomerate Facebook and to be managed by Libra Association.
According to TheVerge, experts argue that the technology behind Facebook cryptocurrency Libra may seem to be the same but not as energy-hungry notorious bitcoins. Giving consideration to its design, the currency would be more centralized than most of its counterparts.
That means, Libra currency would consume less energy, have smaller environmental impact and not all members of Libra Association would be able to create it. But because it’s not yet implemented as of June 2019, it is too early to believe all speculations.
How Facebook Cryptocurrency Libra will Work
Libra currency will enable consumers to transfer funds among themselves and potentially pay for goods and services on Facebook Messenger and WhatsApp platforms come 2020.
This shows that the future of small businesses would be better but not without the readiness of the world to accept the change. Consumers will incur no costs while making transactions online with the use of Facebook cryptocurrency Libra.
According to CNBC, Facebook cryptocurrency will reduce the cost of money transfer, which means consumers can seamlessly make transactions online with faster and cheaper access globally.
Libra Association in its official statement, White Paper, the intention of Facebook is to make money transfer as easy as sending a text message.
This is not in an attempt to undermine the traditional financial system, but to strengthen it by giving people who don’t have easy access to financial banks an alternative way to buy, sell and transfer funds.
Financial technology is meant to enable people to bank at ease but yet about 1.7 billion adult all over the world still find it difficult to take advantage of the system. There are mobile banking, online banking, ATM in all banks but not all consumers can use them because of bank charges and some irregularities.
Consequently, about one billion people who have a mobile phone and almost half a billion who have internet access still don’t have access to a financial bank because of the cost and difficulties attached to it.
Other factors responsible for poor access to banks, according to The World Bank, include insufficient funds to maintain an account, exorbitant or unpredictable bank charges, far distance and lack of necessary documentation.
So, Facebook and partners believe that if this set of people could have access to Libra currency, most of these problems will be resolved.
The current situation is just like in the past when there was no GSM and internet service, only a few people could afford a land phone. Even immediately after the world encountered GSM, the cost of making calls was too much and ordinary people couldn’t afford it.
But now, with as little as $40 anyone can get a smartphone. And once he has internet access, he can seamlessly talk or send messages to anyone from any part of the world without a fee.
As the problem of communication has been resolved, it is about time the world move forward to look into how the same telecommunication technology can resolve some of the challenges confronting both the financial and commercial sectors.
Forces Behind Facebook Cryptocurrency Libra
About 27 payment, technology, telecommunication, online marketplace, venture capital and nonprofits companies such as Mastercard, PayPal, Coinbase, eBay, Uber and Lyft, Womens World Banking, Kiva, Mercy Corps and so on came together to power Facebook cryptocurrency Libra.
The giants formed an association called Libra Association and jointly raised $1bn to fund the new global currency. Facebook stated that the association would be independent of both government and itself.
How Did Facebook Arrive at Libra Cryptocurrency?
Libra currency is not an innovation but an existing payment technology used to make in-game purchases on Facebook.
If you had played FarmVille or any of the popular games on Facebook before, you would remember how you spent money continually to go farther on the game.
The payment system was used to help the game makers, who were external companies, to make money on their products. The system was called Facebook Credits as at then and after a serious upgrade, it became Facebook cryptocurrency Libra.
According to Gabor Gurbacs who is a director of Digital Asset Strategy at VanEck/MVIS in an interview with Barron’s, there is no innovation in Facebook cryptocurrency Libra. What is happening is a war between Facebook and financial services industry which feels threatened because Libra would stop financial banks from making profits on e-Commerce.
Critique of Facebook Cryptocurrency
One of Facebook’s co-founders, Chris Hughes who believed Facebook has crossed its limit, called on international governments to delay the project and call the corporations to order.
In his statement, he says:
“If even modestly successful, Libra would hand over much of the control of monetary policy from central banks to these private companies,” said Hughes, a co-chair of the Economic Security Project, an anti-poverty campaign group. “If global regulators don’t act now, it could very soon be too late.”
He feared that Libra currency would enable Libra Association to hijack economic power from nation states and that could make them wield power against international authorities.
There is the fear that Libra currency will sabotage traditional currencies and the global economy at large because it will hinder financial banks from making profit on e-Commerce most especially on Facebook.
As a result of this, international government and financial regulatory bodies have been trying to safeguard the interests of the concerned, most especially the general public and consumers by questioning the integrity of Facebook to protect consumer data.
There are various headlines talking about privacy issues and political conspiracy in connection with the use of Facebook. That if Facebook cryptocurrency libra should be allowed, it might cause more damages to global economy.
How is that possible?
Should we not ask those who call for antitrust action against Facebook and clamor for the dissolution of Libra Association the same question? If they are the ones sitting on the economy, the new currency will only see the light of the day if they shift a bit.
That sounds great!
It makes Mark Zuckerberg, Facebook and Libra Association THE HEROES of our time.
Let’s give them a round of applause for their achievements so far. But yet we shouldn’t be carried away by the benefits and close our eyes on possible dangers echoed by the critics.
Many people have lost their lives and the world they had used their entire life to build on Facebook while the story is different for others whose fortunes continue to be influenced by the social network.
While Facebook is still dealing with a law suit worth $5 billion on privacy issues, it shocks the world to see the company coming up the shocking news. So, it won’t be too much for government to call for immediate suspension of the project and probe the company.
Facebook claims it dissociation with any privacy violation in the use of Facebook as users agree to the terms and conditions of using Facebook. That means you use Facebook at your own risk…
So, in the case of Libra currency, who will be responsible if I lose all my money to a bloody con should the currency be allowed?
For this reason, before we can even debate on the use or rejection of Facebook cryptocurrency Libra, Facebook has to attend to all petitions left on its table unattended to.
Before 2020, we can still get the answers if we ask more.
You can share your own view, should Facebook and Libra Association be allowed to implement Libra currency?