Libra: Community Reactions and Implications
When Mark Zuckerberg decides to use his personal Facebook account to make an announcement, the outcome can be expected. Media outlets immediately pick the story up and the community interested in the topic does not take long to make itself heard. Libra was announced by Zuckerberg this Tuesday and suddenly all other conversations on the crypto community were silenced. My educated guess tells me that the majority of companies dealing with cryptocurrency, in one way or the other, have begun heated discussions around this announcement too. Who can blame us, hein?
Libra and Its Implications for Crypto
Facebook’s CEO started his post by stating Libra’s mission:
“Libra’s mission is to create a simple global financial infrastructure that empowers billions of people around the world. It’s powered by blockchain technology and the plan is to launch it in 2020.”
Libra is conceptualized to be a stable digital cryptocurrency and, to some extent, is following the lead of JPMorgan. However, unlike “pegged” stable coins that are tied to a single fiat currency, such as USD or Euro, Libra was designed to maintain its own value through ties to a basket of bank deposits and other financial instruments of multiple fiat currencies (USD, British Pound, Euro, Swiss Franc and Yen).
How does the value of Libra stay consistent, then? Is does it by balancing this basket composition in order to minimize price fluctuations. Similar principles are applied at savedroid, where the AI-based portfolio goal is to minimize the risk/volatility by applying optimal saving choices, according to the best performing cryptocurrencies.
When a major player like Facebook aims to enter a market with such an ambitious project, buzz is generated and other agents will get interested and consider “forcing” their way into it too. Add the collaboration of 27 other great organizations, and we are likely to have a game changer.
That’s right, Facebook does not control Libra by itself! Together with companies like Visa, Uber and Coinbase, Facebook aims to co-found a non-profit called the “Libra Association”. So now, imagine the accumulated power and resources that these companies may put into the blockchain and crypto markets in upcoming years. We are not just talking about the creation of products and services, but also the awareness it will generate, which can potentially drive the mass adoption of crypto.
The Crypto Community Sentiment
I was curious about the crypto community reactions to this news, and during the last couple of hours, I have had the opportunity to talk to some colleagues as well as gather opinions from crypto-related Facebook groups.
If you go through a couple of comments in Zuckerberg’s post, you will notice that there are mixed feelings represented — from individuals congratulating Facebook on making this move, to others fearing the amount of power Facebook will obtain (more than it already has if pulling this off successfully).
The situation in Facebook groups is distinct, though. Almost no one (at least from the vocal users) has something good to say about Libra and Facebook’s plans.
Although many believe these plans, and organizations together, have the potential to bring crypto mainstream and diminish banks financial control on society, the crypto community in general is not convinced about Libra and the role of Facebook on crypto and blockchain. In one of the groups I came across the following question:
“Who would you trust the most? The banks or Facebook?” The most common answer? “None” (in many forms :D ). There was also this particular answer in the middle of the discussion: “The bank because Zuckerf*** is a DEMON”. And this brings me to the next point.
In light of the most recent data protection scandals involving Facebook, when asked if they would use Libra, the crypto community reply is a sound “Heck no”. Even considering Mark Zuckerberg’s statement that “Calibra will be kept separate from information you share on Facebook” (Calibra is a subsidiary company Facebook will be launching that aims to handle its crypto dealings and protects users’ privacy), the community is not rest assured.
Final Notes
From this basic analysis, it is evident that the crypto community has trust issues with Facebook! However, they probably do not represent the primary target audience Facebook has in mind. Thus, we shall see the level of the potential adoption of Libra!
On the same note, founding members of the Libra Association (and the development of their Libra products), will certainly have a significant impact on said adoption. It will be very interesting to see what the next move will be of organizations like Paypal, as they are not new to the blockchain industry and certainly have something up their sleeve. Techcrunch even mentions that “Facebook wants to make Libra the evolution of Paypal”, so are we to expect a digital battle similar to the Cold War (aka Space Race) between the USA and USSR?
Moreover, what will be the stance of governments and banks regarding this subject? Will they follow France’s concerns and demands?
Curiosity: I was wondering where the digital currency’s name, Libra, comes from. Libra has its origin in Latin and translates to Pound and Lira. Maybe it is inspired on one of the following:
- The Zodiac sign
- A unit of weight in ancient Rome. It was the forerunner of many currencies such as the old Italian Lira, and the current Turkish Lira and British Pound.
