What I Think of Facebook’s Libra!
A bit of perspective on Facebook’s Libra.
What is Libra?
Libra is a low-volatility and low-cost cryptocurrency proposed by Facebook. Libra’s mission is to empower billions of people around the globe by creating a more inclusive financial system through the use of a more secure, scalable and reliable blockchain.
Libra is backed by a reserve of real assets that will give it a great value. Libra is governed by the Independent Libra Association made up of stakeholders such as Uber, The Women’s World Banking, Visa, PayPal, etc.
I would say Libra is a permissioned blockchain as the validator nodes are only run by the Libra Association and I do not consider a permissioned blockchain decentralized. Also being part of the Libra Association is very expensive and this keeps the ordinary person away and that makes the Libra blockchain centralized and elitist as it is not inclusive and I believe blockchain should be inclusive.
I do not believe Libra is directly a threat to the US dollar as people are still comfortable with fiat currencies and very skeptical about digital currencies. Also Libra is relying on fiat currencies to hold its value so it will not be on Libra’s agenda to kill fiat currencies like the US dollar. Another reason Libra would not kill the US dollar is that it is mainly a transactional currency and not a store of value so holding it for long periods will not benefit the holder as it will not gain any kind of interest. However Libra could shake the dollar especially when it comes to Forex as people, especially in 3rd world countries like African countries. The people will no longer need to exchange their currency into the US dollar which is usually the case when they need to travel or when they need to receive money across borders. A lot of people suffer especially due to high exchange rates and often run at a loss if they are running a business so this is a win for Libra. Libra is what I would call a necessary evil as it will be a driving force towards mass adoption in the blockchain and cryptocurrency space. Due to its 2 billion user base, a lot of people around the globe will be convinced of the reality of cryptocurrencies and this will spark a lot of curiosity and an appetite for knowledge and education.
The future of digital money is very bright and Africa is the perfect example when it comes to the success of digital money. Let’s take Mpesa for example, users do not even need to have a smartphone for them to access funds or purchase products. Telco’s in Africa are also tapping into the digital money revolution and the user base is growing as one does not need a bank account to transact. Digital money caters to any demographic. The inclusive nature as well as cost-effectiveness of digital money as institutions do not need to have physical establishments will drive adoption of and in the process making it a huge success.
Disclaimer: The views expressed by the author above do not necessarily represent the views of the Ethereum Foundation.
