The Libra Log: Will Facebook’s New Cryptocurrency Drive Wide-Scale Adoption?
Jun 19, 2019
US tech giant Facebook (FB) officially unveiled its long-anticipated cryptocurrency project, Libra, yesterday. Libra both embodies and goes against some of the core ideologies that cryptocurrencies were originally founded on. Let’s breakdown some takeaways from Facebook’s Libra announcement yesterday.
- Libra is a new cryptocurrency founded by Facebook that intends to launch sometime next year. Unlike traditional cryptocurrencies whose value lies within their utility, Libra will be a type of stablecoin backed by hard assets such as a mix of fiat currencies in real bank accounts and short-term government debt instruments.
- Libra specifically intends to target the 1.7 billion individuals across the globe that are classified as unbanked. According to comments made to CoinDesk by Libra Association Head of Policy and Communications Dante Disparte, “The goal of this new project.. Is to build a financial ecosystem that can plug in and empower billions of people.”
- Disparte elaborated on Libra’s application by telling CoinDesk, “Implied in this project is that wherever the Visa or Mastercard logo are accepted, Libra would follow suit.”
- Facebook also explained in its announcement that Libra could enable access to credit for small businesses that cannot receive loans.
- The short answer – no. But, of course, there is a much more long-winded explanation to this critical question.
- In their Libra announcement yesterday, Facebook detailed that 28 founding members will join the Libra Association and ecosystem.
- In addition to the complete list of founding members announced yesterday, Facebook also explained that it will establish a regulated subsidiary called Calibra. Calibra will be responsible for enabling access to the new cryptocurrencies while keeping financial data separate from other social data from various Facebook platforms.
- Aside from keeping financial data separate and secure, Calibra is responsible for developing financial services and products that expand on the Libra network. Calibra will begin by launching a digital wallet service where users can send and receive Libra tokens. This is important as it confirms that users will not need a Facebook or WhatsApp account to own Libra, they can simply own a digital wallet.
- Clariba will also essentially be the governing body for the Libra network. Facebook intends to lead Clariba through 2019 before passing the reigns to its more than 2 dozen founding partners. Facebook does, however, intend to remain a member of the Clariba consortium in addition to the other 28 founding partners.
- Facebook also said that the Libra network will, “move toward increasing decentralization over time,” although it did not provide any further detail as to how or when.
- The launch of Libra token will expose nearly 2 billion Facebook and WhatsApp users to cryptocurrencies.
- The Libra network will initially be capable of processing 1,000 transactions per second.
- Libra token embodies some ideologies of cryptocurrencies in the sense that it aims to increase financial inclusion by serving unbanked individuals.
- Libra token does now, however, embody other ideals of cryptocurrencies to its centralized nature and possibility of censorship.
- With its 28 founding partners that feature huge names like Visa, Mastercard, and Uber, Libra token could be the single biggest driver of wide-scale cryptocurrency adoption that the industry has seen to date.
- Facebook of late, however, has been plagued by allegations of illicit data monitoring and unethical data privacy practices. This has many members of the cryptocurrency community up in arms over the Libra launch, while others are praising the launch as a way to drive mass adoption.
- Although Calibra intends to follow all anti-money-laundering laws and know-your-customer compliance practices required in the US, the regulatory standing of Libra currently remains unclear. Just yesterday after the official announcement of Libra, Democratic Representative Maxine Waters, who serves as Chair of the House Financial Services Committee, requested that Facebook pause the development of Libra until Congress and relevant regulators have an opportunity to examine the coin, network, and its implications.