TAKEAWAY: After Bitcoin, if we have to name another digital currency project that has gained a lot of popularity, then it has to be Libra. From backup by industry giants to beef with the regulating bodies, Libra has seen it all. But the question is, is it worth the efforts?
In the past few years, we have seen some significant changes, let it be the technology, the climate, or the financial market. Over a few years, we have seen a booming trend in the usage of cryptocurrencies across the globe. With the popularity of cryptocurrencies, many enthusiasts moved in the direction of either developing cryptocurrency, and some entered the world of trading cryptocurrencies.
As new cryptocurrencies were entering the community, news by the social media giant, Facebook, broke the internet. Facebook in June announced the launch of their cryptocurrency called Libra, a permissioned blockchain-based digital currency. They announced that the cryptocurrency would be launched in 2020. Along with Facebook, the crypto project, currency, and transactions will be managed by Libra Association.
The main aim of Libra is:
- blockchain for Libra will be secure, scalable, and reliable
- backed up by big companies giving it intrinsic value
- governed by Libra Association to evolve the ecosystem.
The Big Backup
Libra Association will operate Libra blockchain and Libra Reserve. Libra Association is an independent, non-profit member of the project. The second member of this project is the social media platform Facebook, and the aim is to use the user base of Facebook to promote the digital currency when it is launched.
Facebook also announced that along with Libra, they are also launching its digital wallet-Calibra. Facebook is known worldwide for the data scams that they’ve carried out over the years, risking user data, and using it for monetary benefits. To ensure people understand this, they have decided to launch Calibra to help separate the social and financial data.
Note: In the past, Facebook failed to secure user data as it was given to third parties to get monetary benefits from those advertisements on their platform. Facebook had to face a lawsuit for this act.
The partners in the project are payment service providers like PayPal, Mastercard, PayU, Stripe, and Visa. From this onwards, there are many well-known industry names as well, like Uber Technologies, Vodafone Group, Coinbase, eBay, Spotify. Many venture capitals and non-profit and multilateral organizations are also part of the project.
Is Libra different from Other Cryptocurrencies?
Let’s first look at what makes Libra a part of the cryptocurrencies world. The first common thing will be that, like every other cryptocurrency, Libra will also be in digital form. Libra transactions will be stored on a blockchain, which will be managed by the founding members in the beginning. As the project will grow with time and expansion, the system will evolve into an open system in the future.
However, we are well aware of the fluctuations that take place in the crypto market leading to a volatile market. The reason behind this volatility for the crypto assets is the reason that any institution does not back them, and they swing wildly. Libra, on the other hand, is supported by more than 20 companies, which will help to anchor the value of the digital asset in the market.
The beef with governments and regulatory bodies
Ever since its announcement, Facebook’s project Libra is facing troubles with the regulating authorities and governments from all over the world. With this announcement, the digital currency project managed to gain the attention of the U.S. regulating authorities, and they began questioning the project and how it will work.
On the other hand, many parts of the world have shown support for the acceptance of cryptocurrencies like Kenya and Zimbabwe. These are the countries where almost 70%-90% of the population is using digital currencies like M-Pesa and Ecocash mobile money systems. Australia is has been accepting cryptocurrencies for a while as a form of payment for almost everything.
The reason behind this backlash by the governments is that they have their doubts regarding the cryptocurrency and how it’ll work. Central banks and some governments have been against the cryptocurrencies and want to kill projects like Libra and Bitcoin and slowly move towards all cryptocurrencies. The U.S. Treasury in a meeting announced that no matter whether its Bitcoin, Ethereum, Tron or Libra- anti-money laundering and terrorist financial measures should be part of the internal design.
Note: The introduction of Libra has forced many countries and banks to look out for the project and develop their digital currencies. China has been a step ahead as they are ready to launch their CBDC developed by PBoC.
France and Germany have been against the development of Libra as they believe it will harm the central monetary policy and system of the country. Bruno Le Maire, Minister of Economy and Finance, suggested that if the development of the project continues, then Libra will have no access to Europe. Amid all these problems, Libra lost support from eBay, Mastercard, Mercado Pago, Stripe, and Visa. PayPal was the first to back out of the project.
Is Libra a blessing or a curse for the crypto market?
The digital currency is facing issues as they were involved in a meeting with the SEC, the U.S. regulators, and several world banks. David Marcus was a part of this meeting as he tried to make the members mentioned above understand how Libra will prove to be better for payments.
In this meeting, he answered the concerns and questions raised by them and explained how Libra could be a definite asset for the crypto industry. Bitcoin noticed an increase in the price as Facebook announced the launch of Libra. Facebook is willing to work with the regulators as they try to follow the regulations and rules to launch the project.
With a user base of more than 2 billion people, Facebook’s Libra will have no problem in gaining the audience it wants, and the media coverage (even if wrong) has helped the currency reach masses. This popularity among people will cause trouble for other cryptocurrencies as they might lose volume in the future. The association of Libra with big companies can also turn the positive buzz about Bitcoin into the negative buzz and eventually crush it.
People from Libra are trying their best to make people believe that it is a platform that could solve many problems like making everyone aware of digital currencies and help move towards digital platforms. This project can also help the government to reach its sustainable development goals like eliminating poverty and gender equality.
Conclusion
Libra is planning to enter the crypto market with the vision of changing the payment procedure portal. The project is open to the public, and the press and media cover the discussions. But then we can also not forget that its association with Facebook can involve some risk for users. Facebook’s terrible reputation in the past and this partnership is not helping in front of the government regulatory bodies and the central banks.
By: Heena Vinayak
Author Bio: Heena Vinayak is the Founder of KillerLaunch.com, a company that helps startups & companies find catchy, killer domain names.
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