This summer Facebook announced its new cryptocurrency, Libra, whose goal is to provide a simple global currency and financial infrastructure that empowers billions of people. They believe that the ability to manage your financial assets on your mobile devices should be available to everyone in a simple and intuitive way. To ensure that the new digital currency fulfills its goal, the financial system will consist of three different elements (1):
- Libra Blockchain
- A real-world reserve
- The Libra Association
First, to target a global audience, Libra will run on its own open-source Libra Blockchain network, enabling anyone to build upon it. The network has been built from scratch to ensure its security, scalability, efficiency, and adaptability. Second, for Libra to succeed it has to be adopted on a truly global scale. To guarantee trust in its intrinsic value, every unit of Libra will be backed by real-world assets such as bank deposits and short-term government securities. Finally, an independent, non-profit membership organization will govern Libra after its creation. Over time the members of this organization will be a wide range of businesses, NGOs and academic institutions from all over the globe, and amongst its founding members are organizations such as Mastercard, eBay, Spotify, Vodafone Group, Coinbase and Women’s World Banking (1).
However, not all is well for Libra. On October 4th, PayPal Holdings Inc became the first member to leave the organization (2), and on the same day Tim Cook, CEO of Apple, launched a barrage of criticism at Facebook. In an interview with Les Echos (3), a French newspaper he said: “I really think that a currency should stay in the hands of countries. I’m not comfortable with the idea of a private group setting up a competing currency”. On top of this, the Wall Street Journal (4) reported that Visa and Mastercard are also debating a potential exit from the Libra Association.
What do you think about the fact that private companies are trying to create their own currencies? And would you consider using Libra?
References:
- https://libra.org/en-US/white-paper/#introducing-libra
- https://uk.reuters.com/article/us-facebook-cryptocurrency-paypal/paypal-becomes-first-member-to-exit-facebooks-libra-association-idUKKBN1WJ2CY
- https://www.lesechos.fr/tech-medias/hightech/pour-tim-cook-le-patron-dapple-certains-gafa-ont-sans-doute-ete-arrogants-1137197
- https://www.wsj.com/articles/visa-mastercard-others-reconsider-involvement-in-facebook-s-libra-network-11569967023
