Facebook “Likes” CryptocurrencyWe asked Jonathan Bartlett, what the new coin, Libra, means for Facebook? For crypto?
As noted earlier, Facebook intends to start minting its own cryptocurrency, the Libra.
Forkast News, which reports on all things crypto, is cautiously hopeful:
A consortium led by Facebook recently announced the introduction of a new cryptocurrency, the Libra. Unlike most other cryptocurrencies, the Libra will be fully covered by financial assets. One of the aims of the Libra is to connect billions of people who do not yet have access to financial services to the financial system. The effects of the Libra will therefore first be felt in emerging markets, but soon this crypto can also manifest itself elsewhere. If the Libra actually gets off the ground, it potentially also has a greater impact on the financial system than other cryptos.Wim Boonstra, “The Libra: Potentially a Welcome Addition to the Financial System” at Forkast News
Two advantages Boonstra cites are the backing of major players like Mastercard, Visa, and Paypal and the apparent willingness of the consortium to work within the regulated financial system, as opposed to maintaining a financial Wild West.
Mind Matters News asked Jonathan Bartlett of the Blyth Institute, who follows cryptocurrencies, for a comment. He is skeptical for now:
What makes Libra different is who it seems to be serving. Cryptocurrencies were built to serve the needs of digital Libertarians (though I’ve argued that it has largely failed to do so).
Libra is focusing on something different. Being run by Facebook, I think the goal of Libra is more political than practical. That is, Facebook already has the ability to connect anyone to the financial markets that they want. That’s not the problem. The problem is that Facebook (a) doesn’t want to have to deal in a bunch of different currencies, and (b) doesn’t want to upset any country they are operating in by preferring one currency to another. Thus, they are creating a new currency which will be essentially backed by currency reserves from other countries.
This way, they can tell each country that they are dealing in their local currency, without having to actually support those currencies on their platform. It solves a political problem for Facebook, but I don’t see that it solves problems for anyone else.
Here’s the white paper from Facebook. Here’s a backgrounder from TechCrunch.
Thoughts from other sources:
“Facebook Libra coin: why the cryptocurrency is no bitcoin rival” (The Week) “Facebook plans to develop Libra into a “global coin”, pegging it to “well-known currencies” such as the US dollar and British pound in a bid to prevent the “wild swings” of conventional cryptocurrencies such as bitcoin and Ethereum, says the BBC. ”
“Facebook’s Libra Lacks Foundational Components for Crypto Key Security” (Steven Sprague, Coindesk)
“The ambitious plan behind Facebook’s cryptocurrency, Libra” (Steven Levy and Gregory Barber, Wired) “To deflect the well-justified wariness of Facebook’s every move, Facebook has open-sourced the technology, and will cede control of the blockchain to a neutral Libra Association—kind of a Switzerland of digital coinage—that will of course be based in Switzerland.”
“Will Facebook’s digital money Libra be good for Africa? ” “As a Zimbabwean living in South Africa, I have become numb to the daylight robbery that ensues whenever I receive money from abroad or send cash to my family back home. As such, like many other cautious pragmatists, I relish the prospect of a network like Libra permanently disrupting the lucrative cash remittance businesses of large banks and money transfer services like Western Union and MoneyGram.” (Andile Matuku, BBC News)
Background: Facebook is said to be exploring minting its own cryptocurrency (November 2018)
How do bitcoins work, anyway? And what’s their future? A roundup for non-geeks
Also by Jonathan Bartlett on cryptocurrencies
Bitcoin: Is lack of trust the biggest threat? It’s almost a parable: Everyone can see, no one can access, the millions trapped in the ether by a password known only to a dead man
How Bitcoin works: The social value of trust
Is Bitcoin safe? human side of security is critical