The universe of crypto revolves around an aversion to a central financial authority. The financial crash of 2008 made people skeptical of central banks. And the rising popularity of cryptocurrencies vindicates it. But now Facebook has announced to launch its own crypto coin, the Libra Cryptocurrency, which is not as decentralized as the more conventional cryptocurrencies.
Overview of Facebook Cryptocurrency
Facebook has announced that it will launch a cryptocurrency, Libra. People could send each other money over Whatsapp and Facebook Messenger, and purchase items online with it.
The reason for launching it – as mentioned in Libra’s Whitepaper – is to bring 1.7 billion people into the financial ecosystem which are not currently part of the conventional banking system.
With Facebook’s reach, it seems possible.
But it is important to know that Who is actually backing Libra?
Libra is primarily backed by the Switzerland-based Libra Association. It is also supported by the likes of Mastercard, Visa, PayPal, Stripe, eBay, Uber, Lyft, Spotify and Coinbase, among others.
Despite this strong alliance, there is a problem, trust, or the lack thereof.
If you do not trust the central bank and the federal reserve system then why would you trust Visa and MasterCard that are backing Libra coin?
This duality is obvious in Libra.
On one hand, it is using blockchain technology but it is not an open ledger, yet. This, perhaps, is to keep the network secure considering the security breaches of cryptocurrency exchanges we have witnessed in recent years.
Mark Zuckerberg on the Security of Facebook Libra Cryptocurrency
Mark Zuckerberg, the CEO of Facebook, understands security concerns. In a recent Facebook post, he specifically addressed this issue, “Privacy and safety will be built into every step… Libra will be regulated like other payment service providers,”.
The prevalent nature of Whatsapp and Messenger creates suspicion regarding the privacy and security of online transactions. Zuckerberg added;
“Any information you share with Calibra will be kept separate from the information you share on Facebook.”
What is Calibra?
Calibra is the e-Wallet or virtual wallet for the Libra coin. According to the official Facebook news source it will be available on Whatsapp, Messenger and as a standalone app.
Since there is a significant emphasis on the security of Libra’s functionality, it is unlikely for it to operate without KYC compliance and AML compliance.
How Libra Cryptocurrency is Different
Here is an excerpt from Libra’s Whitepaper;
“It is built on a secure, scalable, and reliable blockchain […] It is backed by a reserve of assets designed to give it intrinsic value, and it is governed by the independent Libra Association tasked with evolving the ecosystem.”
One way to look at Libra is that it is similar to Bitcoin as it is a digital currency that runs on the Blockchain, and offers smart contracts, much like Ethereum. Many are considering Libra more similar to Ethereum than Bitcoin.
Libra’s structure contains all the main features of Ethereum; the account model, generic language, gas, on-chain scaling with sharding among others.
We have already seen so much chaos in the world of cryptocurrencies that a name such as Facebook seems like a good addition. The breach of users’ private data through Facebook did not deter its two billion users. On top of that Libra is a stable-coin.
Security is a major concern. The real reason behind the potential abuse for Libra is crooked developers. Facebook intends to allow anyone to build apps on Libra’s platform in the future. The escapade of Cambridge Analytica which resulted in the breach of 87 million people’s personal data is still fresh.
What Libra Means for the average Facebook User
If you are a happy user of payment system such as PayPal or Skrill, Libra might not mean much for you. But those people are not Facebook’s target audience.
The real market for Libra are the people sending money to their loved ones from abroad. This also includes the 1.7 billion people that are currently outside the realm of traditional banking. That perhaps is the biggest target market as far the cryptocurrencies are concerned.