Facebook made waves this year when they announced that they were creating their own digital currency called Libra. Facebook says that the point of this new currency is to provide payment services to the millions of people who do not have easy access to digital payments.
Given Facebook’s privacy concerns, which continue to plague the company, many people were concerned right away that Facebook would be using all this fresh financial
How will it work?
Libra will be on similar blockchain technology as bitcoin and its value will remain stable thanks to a reserve that will back the currency. Unlike Bitcoin, its value will not rise and fall constantly. It will be available to use via messenger and WhatsApp. It’s supposed to launch in 2020. Not much is known about Libra right now and while Facebook announced it and there was much twittering (both real and otherwise) about the new cryptocurrency, not much else is known.
Should Facebook be in banking?
This is the existential question that has many tech people and others thinking about Libra. Do we really want Facebook in the banking business? Do we want private companies creating currencies alongside national currencies? What if there is fraud? What if people lose money? Libra won’t be insured by the FDIC or any government agency. What about financial regulations? The regulations for cryptocurrency are just not being written. People are just beginning to pay taxes on the appreciation of the assets. Will Libra be traded like other cryptocurrencies? These are all questions that have still not been answered. However, there is still possibility in this. One of the areas where Bitcoin and other coins have failed is being able to be used in the real world. Payments on bitcoin are slow and expense. Bitcoin Cash was supposed to solve that and Litecoin has done good work in creating a currency that people can actually use. Libra could be the breakthrough cryptocurrency that makes it mainstream and that people use on a daily basis.
Government and money
This does not solve the problem of one of the fundamental things that governments do: issue currency. Issuing currency is usually the purview of government. However, with the rise of cryptocurrency, which was always meant to break down government monopolized currencies through decentralization, what does this mean for national currencies? Should private corporations be in the business of owning and controlling currencies? How will these differences currencies be exchanged? How will this new economy work and more importantly, how will it blend with the existing economy? National currencies could be undermined and even phased out eventually. What will the world economy look like then? How will it work? How will people get paid and spend money using variable currencies that governments do not own or regulate?
It will be interesting to see how Libra works once users are able to get ahold of it, buy it, and use it on the platform. To learn more about Libra watch this video from the Washington Post: