Discussion Board

First off, the Libra is not actually Facebooks version of cryptocurrency. It was created by the Libra Association of which Facebook co-founded.  According to Mark Zuckerberg who was speaking in front of the Congress stated that the Libra “would help the world's unbanked enter the financial system. And the US needed to lead in cryptocurrencies”.  My question to that statement would be, if someone has access to a computer, smartphone or other network capable device, from which they could obtain cryptocurrency, why wouldn’t they have some sort of banking capabilities? If someone has a legitimate job, there should be no reason for them to not have access to a bank to deposit or withdraw funds.

A few years ago, Facebook had created “credits” for members to use for purchasing games on Facebook, so they already had some loose form of cryptocurrency. In order to control and manage Libra, Facebook create Calibra to keep the social media platform separate from its cryptocurrency ventures.  The social media giant confirmed that they are not able to control the libra, but they are 1 of 28 founding members of the association that controls it.  What is concerning for potential investors in Libra is that seven of the original members have withdrawn.  Companies such as PayPal, eBay, Stripe and financial services giants Visa and Mastercard have all pulled out of Calibra (cnet.com).  Another major member to back away was Booking Holdings which manages websites such as Priceline, Kayak and OpenTable (cnet.com).

Where the Libra differs from other cryptocurrency, is that it is backed by a select basket of assets including "bank deposits and government securities in currencies from stable and reputable central banks.".  Cryptocurrency such as bitcoin do not have anything to back it, therefore it is solely based upon speculation.

What most people seem to be concerned with is what Facebook will do with the financial and personal data they would have access to if users were to purchase and transact using Libra.  Prior to the cryptocurrency, Facebook was already under a microscope for its practices of screening and filtering content.  They have been questioned about their screening processes and how they allow users to post fake news presented at truth. 

As a risk averse person, I would not invest or trade in Libra (or any other cryptocurrency) for that matter until it is more regulated and monitored.  The fact that Facebook has had their hand in both the development of the currency and the "monitoring" of it, makes me highly suspicious of their intentions.  Those that are willing to take a gamble with both their money and their personal information, may think otherwise.

 

https://www.cnet.com/news/heres-what-you-need-to-know-about-facebooks-controversial-libra-cryptocurrency/

E-mail me when people leave their comments –

You need to be a member of UNH Economics Collective to add comments!

Join UNH Economics Collective