Could the most powerful social media network in the world have just increased its prominence in our daily lives? Facebook has announced the details of its crypto currency, Libra. And not everyone is thrilled about it.

On June 18, Facebook announced its new digital currency, Libra. It is run by a Geneva-based organisation- the Libra Association. Libra will launch in the first six months of 2020. The Swiss entity is made up of many powerful founding partners including Facebook, Uber, Visa, Mastercard and Visa. 

The reserve-backed currency utilises blockchain technology. Hoping to allow people everywhere to spend and save their money securely. 

Why Libra?

Libra offers payment over the internet, claiming to enable the 1.7 billion adults across the globe without access to a bank account or bank card with a means of digital currency. 

Libra claims it is “a simple global currency and financial infrastructure that empowers billions of people.” Enabling people to send money across continents as simply as if they were to send a text message. 

The currency aims to bridge barriers for those in developing countries who are left behind in the global economy. Simplifying a global currency, they intend to “Reinvent money. Transform the global economy. So people everywhere can live better lives.” 

Libra claims to enable the 31% of the world without access to a bank, a means of secure finances. Reducing friction and speed of international transfers. 

Libra released a whitepaper stating the founding factors and beliefs of the digital currency. Proposing that Libra will bring about economic opportunity, through the low-cost movement of money. In addition, increasing the volume of commerce around the world. 

Libra aspires to enable people an alternative to centralised financial institutions which have shown to reduce consumer’s trust. 

They believe that finances should be ‘public good’ of the wider community and governed as so. Whilst they aim to improve inclusivity and ethical management of finances. 

So what is it?

The founding features of blockchain technology include open access. Which enables access for anyone with an internet connection. 

No transaction cost with transactions occurring in an automated manner. 

Decentralised governance enabling security and an inability for the storage of information and therefore unable to be hacked. 

Security through cryptography, “which protects the integrity of funds.” 

Libra believes it is the answer as a lower-cost, accessible, global financial system.

What's the problem?

Whilst Libra claims to be decentralised, the adoption of the term is sparking criticism as mass organisations are subject to regulatory processes from governments globally. 

Blockchain technology was largely developed to remove control from overly powerful organisations such as banks and large scale corporations. However, Libra is founded by the likes of Vodaphone, Lyft, Stripe and PayPal

Libra is said to undermine the most basic premise of digital currencies like Bitcoin- the freedom from control of big corporations. 

These corporations profiting from the use of the currency. Concerns are raised that the founding companies will put their corporate interests ahead of the concerns of the public. 

The concern is that these corporations will have too much power and businesses are urging global regulators to task Libra before its too late. In order to prevent this unknown. The supposed ‘shift in power’ and ‘decentralisation’ is largely been criticised as a shift of power from the banks and traditional financial institutions we are with to multinational corporations. 

Decisions will be made by the Libra Association- basically Facebook and its partners. Enabling a corporate layer of control on people’s money. 

Who’s using it?

Since the launch, Spotify has announced they're joining the Libra Association. Stating “the independent, not-for-profit organization was founded to create a simple global currency and financial infrastructure that will empower billions of people.” 

Basically, any multinational is wanting to join the founding body of superpowers that are making up the association. For fears that these giants will hold an incomprehensible control over the global economy. 

What’s next?

Following the launch of Libra, Cryptocurrencies have seen an increase in value. Bitcoin prices surpassed $10,000, “hitting their highest point since March 2018.” 

The media coverage of Libra has sparked mass attention leading people to honour the correlation and choose to invest following the public interest. Libra’s announcment has legitimised the cyrpto market for many sceptics. 

However, scepticism against Libra’s claims for decentralisation is just the start. With many public concerns being raised that  “Facebook is too big and too powerful.” 

The war to halt the evergrowing social media giant and its increasingly concerning power is just beginning. 

What are your thoughts on Libra?


 

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