miércoles, 17 de julio de 2019

The many fears around Libra

Libra is not only one of the twelve horoscope´s signs  anymore. Since Facebook´s announcement of its participation in a cryptocurrency called by that name, the predominance meaning of the word Libra has changed for many people. Only that fact give us an idea of the social network power and help us to grasp why regulators and politicians from both sides of Atlantic have got so nervous about the new cryptocurrency.

But what is Libra? Is it such different from other cryptocurrencies as to fear it? The answer is yes, it is extremely different to other popular digital coins. It is backed by a bunch of big companies (Facebook, Lyft, Uber, Vodafone, Visa), its potential user base is nearly a quarter of the population (Facebook´s users), it will be backed by physical world currencies and it will have identificable governance institutions. These among other features makes Libra the potential killer application for blockchain and predicts a rapid adoption of it.

The concerns about the new coin starts with the new source of data that Facebook would have at its disposal. Having access to the data related with the money a user has and how he spends it, in combination with the data it already has from each user, would  mean having a complete picture of a quarter of the human population. Taking into consideration the record of abuse of the personal data of the company, it is not a tranquilazing scenario. 

The stability and security infrastructure which would provide support to Libra its a second point for concern. The criticallity of Facebook´s infrastructure would increase  substantially and there are serious doubts that the company is prepare for it. The recent failure of Facebook´s services and the frecquent vulnerabilities that drive to personal data breaches are examples of pieces of news we would not like to see associate with the infrastructure where our money is deposited.

And of course, there are concerns of the consequences of such a powerful cryptocurrency for the stability of the financial system. Two of the many of these consequences has been widely commented. On one hand, some economist are warning about the impact that the frictionless currency market enable by Libra would have on weak currencies and the stability for the economies of countries that issue them. On the other hand, it may implies a complete dissapearance of the current intermediaries  of the retailing financial services.

Although Facebook has had up today show its capacity on the digital world and its ability to jump over the governments concerns, perhaps this time the mountain is so high even for Mark Zuckerberg.

1 comentario:

  1. There are certain doubts about the need for a new cryptocurrency. But bitcoin and etherium are stable enough to keep their positions. I myself make a cryptocurrency exchange - https://365cash.co/en/. It requires basic attention and business acumen. It will be interesting to me to catch a new wave with cryptocurrency from the FB.

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