What Is Facebook’s Libra Cryptocurrency?
Facebook has long-since evolved past its position as a social media platform. Nowadays, it serves as “a publishing platform, an advertising network, a personal telecommunications network, a surveillance corporation, a content distributor, a marketplace, and a healthcare network”—as American politician Alexandria Ocasio-Cortez put it.
It seems that Facebook intends to add “bank” to these monikers, too. The platform wants to bring a new cryptocurrency to the field of finance: Facebook Libra. With more than 20 percent of adults transferring unbanked paychecks online, a corporate-sponsored cryptocurrency could provide people with a measure of safety that other cryptocurrencies lack.
The issue, though, is more complicated than it seems.
The Start of Libra Season
Rumors of Facebook’s intention to craft a cryptocurrency began to circulate in December 2018. Having previously acquired WhatsApp, the mogul wanted to offer its users an easier way to transfer money to one another via its plethora of platforms.
It wasn’t until June 2019 that Facebook formally announced its intentions via its whitepaper. This whitepaper outlined Libra’s essential features, which include:
- Stable and scalable blockchain
- Governance by the Libra Association
- Use of a LibraBFT consensus mechanism
- Coding through the “Move” programming language
- Coin backed by physical assets
Libra’s Unique Blockchain
Facebook differentiates its currency from the Bitcoin of old with a relatively unique string of blockchain. In general, blockchain can be categorized one of two ways: permissionless and permissioned.
Permissionless cryptocurrency is accessible to everyone. Anyone can utilize it and anyone can “mine” it. Permissioned blockchain, comparatively, center through a network of banks or equivalent financial institutions.
Where Bitcoin was a permissionless blockchain, Libra will start as a permissioned blockchain. Note the term “start.” Facebook, in its whitepaper, made it clear that it intends for Libra to eventually serve as a permissionless chain as soon as it proves stable enough to do so.
Facebook’s desire to make it easier for users to send money to one another may seem innocuous, at first. A number of parties, including the U.S. Senate, disagree, especially given Facebook’s recent history of data mining.
In July 2019, Facebook representatives defended the release of Libra in front of the U.S. House Committee on Financial Services as well as the Senate. Representatives including Carolyn Maloney of New York expressed their belief that use of Libra would allow Facebook too much access to its users’ private financial data. Given the recent scandal regarding data sales to Cambridge Analytica, the U.S. government believes that Facebook would use this greater access to boost its revenue through less-than-legal means.
Currently, bills are circulating through the House that would, at the least, put the development of Libra on hold, if not bar it from release entirely.
On one hand, the release of a cryptocurrency such as Libra through a platform as popular as Facebook could benefit those small business owners who make primary use of Facebook’s marketplace. It’d be much easier to see transactions through and to reap the rewards of marketing campaigns.
On the other hand, providing Facebook with sensitive banking information when the platform is so tied up in scandal has caused many outside voices concern.
Will we see Libra released anytime this year; or, is the currency resigned to wait due to these safety concerns? Whatever the case, the development of a corporate-backed cryptocurrency suggests that change is on the horizon – for marketers, bankers, politicians, and small business owners in all industries.
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