Is Facebook’s Libra Coin Actually A Cryptocurrency?
Facebook has recently announced its upcoming Libra Coin, to be released in 2020 as a kind of digital stable coin that skirts on the edge of blockchain and cryptocurrency definitions. Libra Coin will become available immediately upon release on WhatsApp and Facebook Messenger, as well as through other partners.
This could represent a serious turning point for the world of cryptocurrency, and indeed for society. Thinkers recognize that technology is building towards something and that it is soon to transform the way the world works. Ex-tennis and backgammon player and current poker pro, Alexandros Kolonias describe this point as “an edge where a technology explosion will happen”.
A similar feeling and actuality pervaded society at the dawn of the internet. Indeed, the pattern may give us more hints than we might feel comfortable with. What seemed to start as a glorious period of human enlightenment (as well as a scary web where anything and everything could be found), soon became centralized and debased by controlling forces.
Can we really trust Facebook to lead the way in the cryptocurrency industry? Can individual users trust them with their data?
What Is Libra Coin?
Libra Coin is a digital currency that will be accessible through apps and stored in digital wallets. You will be able to send and receive money, as well as pay for goods and services. In this way, it’s similar to Paypal.
The value of Libra Coin will be directly tied to reliable fiat currencies so that the value should not go up exponentially. It will be tethered to the ‘market value basket of several trusted currencies’.
So, what makes this
Libra could prove useful for the 1.7 billion adults around the world who do not have a bank account or access to traditional financial systems, many of whom have access to mobiles or the internet. For everyone else, there may be additional incentives and benefits, much like credit card rewards, as well as lower transaction fees.
Opinions, Potential Benefits, and Drawbacks
Let’s be clear here. Any technology that can help to provide resources to those who are struggling is worthy and potentially very beneficial. The only drawback is that this technology will come from Facebook. Without going into a huge rant or global conspiracy about who controls what, let’s just keep it simple: your data is possibly at risk.
For sure opinions are divided, and Facebook’s Libra Coin has become a hot topic of debate. Roneil Rumburg, CEO of a blockchain music streaming service, believes that Libra Coin will serve to legitimize the industry and bring cryptocurrency into the mainstream. This could increase the overall market size for cryptocurrency in general and accelerate adoption. Yet not everyone has a positive opinion.
Actually, Libra Coin has been criticized for going against the ideology of the cryptocurrency community. This is not a decentralized currency. It is owned by Facebook and its group of 28 partners, including the likes of eBay, Paypal, Vodafone, and other global corporate giants. Philosophical debates aside, this causes a number of privacy and data concerns. Financial transactions could be sold to third parties or used in advertising, and many expect Facebook to find creative ways to cash in on all of that lovely, ripe transactional data.
Surely the fact that Libra uses blockchain technology will alleviate some of these concerns? Well…
Not Really Blockchain?
Without going into Libra’s backend, it’s simple enough to see that the coin doesn’t run on an actual blockchain, not in the sense that we have come to understand it. A blockchain is, as the name suggests, lots of blocks of data chained together. The Libra white paper describes their blockchain as a “single data structure” that creates a history of transactions.
The blockchain is technically distributed across its users, but the whole system is managed by the Libra Associated, again comprised of Facebook and its chums, as is the underlying code for the coin.
One of the defining factors that make a coin a ‘cryptocurrency’, according to a standard definition on Investopedia, is that it is not issued by a central authority, rendering it immune to government control. This is simply not the case with Libra, which is controlled and managed.
So there you have it. Libra isn’t really a cryptocurrency and it doesn’t even really run on a blockchain. Whether or not it has a positive impact on the ecosystem and society at large, we are yet to find out. Facebook and Libra could lead the way and boost the industry, or they could strip the concept down to control and sell all your data. I’ll let you make your mind up about the likely outcomes.