The Capital
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The Capital

What Do The Facebook Libra Hearings Mean For Cryptocurrency?

By Radix DLT on Altcoin Academy

David Marcus responds to questions at the US Senate Committee Hearing on Facebook Libra

On the 16th and 17th of July, the co-founder of Libra and lead for Calibra, David Marcus, was questioned by the US Senate Banking, Housing, and Urban Committee, as well as the Financial Services Committee. The event was streamed live on YouTube and received widespread commentary in the crypto community and beyond.

As suspected, the US Senators didn’t pull their punches. Before David Marcus even had a chance to answer questions, Senator Sherrod Brown fired the first shots in his opening address to the Committee, describing Facebook as ‘dangerous’ and ‘arrogant’

“Facebook’s CEO Mark Zuckerberg has said that Facebook might be more like a government than a company. But no one elected Mark Zuckerberg.” Senator Brown commented.

Question types from Senators at the Facebook Libra Hearing

Facebook’s misdemeanors in regards to users’ privacy and data have been well documented and continued to be a bone of contention for Senators throughout the course of the hearings. Senators repeatedly asked why anyone would ever trust Facebook with their money. Senator Martha McSally scathingly stating

“Instead of cleaning up your (own) house, you’re launching another business model.”

The Facebook Libra project has, for the most part, drawn widespread criticism from the crypto community, but many have failed to see the silver lining.

The Facebook Libra Senate Hearings, along with the recent tweet from US President Donald Trump criticizing cryptocurrency have by default, exposed cryptocurrency and blockchain technology to a wider audience than it has ever known before.

The US President Donald Trump tweets about cryptocurrency and Facebook Libra

For example, the latest research conducted by U.S. brokerage eToro has found that while 58% of the U.S. adults have heard of Bitcoin, the first and largest cryptocurrency, Facebook’s Libra is already known by 16% of people — only a month after it was unveiled. Ethereum, the second-largest cryptocurrency, has achieved only 12% recognition since it went live in July 2015 and it can be assumed that smaller cryptocurrencies like Ripple’s XRP and Litecoin are less well known still.

“We believe that crypto and the blockchain technology that underpins it will be essential to tomorrow’s economy,” said Guy Hirsch, U.S. Managing Director of eToro.

“By introducing the concept to a new audience, Libra could play a vital role in the evolution of decentralized and more democratized finance.”

Binance CEO Changpeng Zhao echoed this sentiment, saying:

“(President) Trump so far has not done anything positive or negative, he’s just said he’s not a fan,” Zhao told CNBC in an interview last week.

“The fact that he tweeted about it, and the President of the United States is talking about cryptocurrency, it’s a good thing.”

Those inside the crypto bubble often overlook the fact that cryptocurrency is still widely regarded with skepticism and mistrust by ordinary people and sensationalized in the mass media.

During our design sprint earlier this year, where the Radix team got together to create and test an offering for a fiat-backed token on Radix, we held customer interviews to see if the general public would be receptive to such a service and platform. Most of the people we interviewed had little knowledge of cryptocurrency and as soon as they realized that they were in fact using cryptocurrency, the large majority became anxious and wanted to withdraw their crypto back into their accounts and exchange it for ‘real money’. Many were concerned that they would lose the money altogether and were extremely skeptical about using cryptocurrency.

This was indeed reflected by many of the questions that Senators posed to David Marcus of Facebook Libra. They were concerned with whether AML regulations would be complied with and also brought up several times about counter-terrorism measures and how crypto is used by drug dealers.

If the world is to truly understand the power of blockchain technology and cryptocurrency beyond the sensationalist headlines, this hearing is certainly a very important step in starting that process. If cryptocurrency is ever to be adopted by the masses, the walls of skepticism need to be broken down and people need to see cryptocurrency as ‘real money’ and not something dangerous and volatile supposedly used by those on the fringes of society.

Despite Facebook’s issues with user privacy and the shockwaves that the Cambridge Analytica scandal caused, they have maintained their massive user base of over 2 billion people who still continue to use the platform despite data breaches. There was no mass exodus as many predicted.

The resources at Facebook’s disposal mean that they are better placed than any other current crypto projects to be able to overcome regulatory hurdles. It is hard to imagine any of the most successful current crypto projects being able to force a regulatory conversation at the highest levels of the US government in such a short space of time in the way Facebook has.

Facebook’s cryptocurrency vision is, granted, different to the ideals established by Satoshi Nakamoto in ‘Bitcoin; A Peer to Peer Electronic Cash System’. There is still a lot of mystery surrounding the governance of the Libra Association and how much power the companies involved will have, which led to one Senator describing it as ‘like the Spectre organization from James Bond’.

However, these US Senate Hearings could likely represent the first step in establishing widespread consumer faith, or at the very least, familiarity with cryptocurrency. If consumers are to use cryptocurrency like they currently use their bank apps and cards these difficult conversations need to be had sooner rather than later, so all objections and fears can be circumnavigated.

If Facebook succeeds in pushing past the current regulatory framework and establishing new dawn for blockchain and crypto, it can only benefit projects like Radix and many others in the space.

What’s more, when mass adoption of crypto is a viable option, an infrastructure will be needed to support millions of users; that could support all 2 billion users of Facebook simultaneously, for example. Currently Facebook Libra proposes 1,000 transactions per second at launch, which means they would fall massively short of being able to serve their full database. It would be a shame to surpass all regulatory hurdles only to find that the technology needed to underpin widespread adoption is not up to scratch.

Radix has already peaked at 1.4 million transactions per second on a completely decentralized ledger. Our platform is ready to serve the world and harness the power of decentralized technology for use by anyone, anywhere in the world.

Blockchain technology and cryptocurrency have had a spotlight shone on it on a global level, and although that spotlight may have revealed many flaws, we may look back and see it as the vanguard of a new era.

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