Libra, Facebook’s brainchild, continues to split opinion among regulators, crypto enthusiasts, blockchain experts, and basically every other sphere of the general public. Libra’s mission as per their white paper is to create a financial infrastructure that will expand access to capital, provide a platform for financial services innovation and increase efficiency of sending money seamlessly.
Accordingly, this will unlock new frontiers by bringing financial inclusivity inclusion to the over 2 billion unbanked and underbanked people across the globe. The announcement of these ambitious plans by Libra has resulted in divergence in opinions in regard to the project legality, capability, user rights, and control among other issues. From some quarters the Libra coin is perceived to be the usher in a new era of the internet of value with Libra serving as the ‘money of the internet’. In other quarters, Libra is seen as Facebook’s attempts to seize control over user’s finances and subsequently, roping them in an inescapable web of dominance.
What is Libra?
According to the Libra white paper, the Libra cryptocurrency is to be built on a secure, credible, scalable, and trustless blockchain that will facilitate speedy, cheap, and reliable payments on its robust network. This ecosystem will be governed by the Libra Association -currently comprising 27 firms- that will ultimately comprise 100 members drawn from different industries, countries, and sectors.
You can read more on Libra here
The Libra-Facebook conundrum
The Libra idea has been developed by Facebook and as such it bears the greatest responsibility for this project. With Facebook battling with regulatory issues relating to data privacy breaches, and generally losing trust among its users, Libra may fail to take off.
Facebook, however, continues to give assurances that they will not have direct control of the Libra project and as such users should not be concerned about breach of their privacy and data. Suffice to say, not many people are buying this.
Being Facebook’s and Zuckerberg’s baby, Libra brings with it significant baggage from its parent company. Facebook has been fined a record $5billion to settle an investigation into data privacy violations in the Cambridge Analytica scandal where data of over 87 million users was shared illegally. This coupled with other issues such as spread of Fake News and Election meddling are just like a foul stench that won’t go away. And it is weighing down on Libra.
Facebook has publicly declared and reiterated that it will have no access to users data. According to a Facebook news release, their interest in the Libra project will be represented by, Calibra, a subsidiary of Facebook, Inc. Calibra will provide financial services by providing a gateway to the Libra blockchain. The Calibra will be available as a standalone app as well as having accessibility via buttons on Messenger and Whatsapp. Through a release in its newsroom, Facebook insists that it will not have access to Calibra users’ data and will ensure protection of privacy. Despite these assurances, some statements in the release do not inspire confidence.
Aside from limited cases, Calibra will not share account information or financial data with Facebook or any third party without customer consent. This means Calibra customers’ account information and financial data will not be used to improve ad targeting on the Facebook family of products.
Such statements are better left to interpretation. But we have been down this road before. Fool me once, shame on you, fool me twice, shame on me.
Despite the continuous assurances given by the Facebook executives, there isn’t much conviction to go around. Facebook seems to have outlived their trustworthiness and the public do not seem too eager to lend them a lifeline even with the promise of a currency of the internet. Once bitten, twice shy. So they say.
Facebook understands that their past actions may have placed Libra on a very precarious position. Hence, the company is working with regulators and lawmakers seeking to address their past wrongdoing and try to initiate Libra on a clean slate. However, skepticism is high with Zuckerberg’s motto at Facebook ‘Move fast and break things’ does not seem to sit well with the gatekeepers this time round.
Facebook seem to have understood this and is trying to do this Libra project the right way with the Libra project making arrangements to get approval from different countries before their planned launch in 2020. How this will play out, is what we are about to find out.
Thus far the signs are not looking good for Libra.
Already, Libra is being faced with strong resistance from governments and lawmakers across the work. In the US, Maxine Waters, a Democratic Congresswoman, has proposed a bill aimed at preventing big tech firms like Facebook from venturing into the financial industry and developing digital currencies.
Earlier in July, Facebook announced that it would not launch Libra in India due to strict government opposition of digital currencies. Given that India is Facebook’s biggest market this is a major blow for Libra.
Other countries such as South Korea, Japan, and Germany have all raised their concerns about Libra and its existential threat to the stability of their respective nation’s financial systems.
Looking deeper into the briefs given by the authorities in these nations, there is a shared aversion about allowing Facebook to develop, a cryptocurrency. In the regulatory spheres, opponents of the Libra project have cited issues such as user privacy protection, financial stability, sovereignty of national currencies, money laundering and terrorist financing in varying degrees.
At the individual user level, discussions about Libra continue to revolve around the protection of users’ data and privacy. Following Facebook’s much publicized scandals for selling private user data, it is plausible that individual’s likelihood to adopt Libra will be influenced primarily by their safety concerns.
The agreement in opinion between regulators and users about privacy protection is beginning to form a pattern of the general dislike of Facebook being at the helm of the next generation currency. Ultimately, Facebook’s past, and the damage it has caused may become the poison chalice that kills the Libra coin.