The unveiling of Facebook’s Libra currency has led to a lot of chatter among crypto enthusiasts, some of whom have vehemently refused to support it. Facebook has said that the crypto will enable users to make faster and cheaper international payments online, using platforms such as WhatsApp or Facebook messenger. With Facebook scheduling the currency’s official launch in 2020, backed by a separate entity The Libra foundation; a lot of entities as well as experts have expressed their reservations about the Libra project.
According to Facebook, Libra just like any other cryptocurrency will have its own wallet called Calibra, where users would be able to send and receive Libra. Facebook through the project head David Marcus claims that the wallet will have strong protection in order to keep data and money safe. There have however been questions raised on whether Facebook are just paying lip service here, due to the company’s history of mishandling data. The Libra project is therefore being threatened, and here are the main issues that are currently threatening to halt any more developments of this project.
Skepticism in congress
Congresswoman Maxine Waters, who is also the chairwoman of the house financial services committee, wrote to Facebook calling for the immediate cessation of any further development on Libra. The letter said that the social media giant should desist from any further action until the congressional financial services committee, and other affiliated committees; determine the possible risks Libra could cause to the global financial system. The letter also referred to Facebook’s recent privacy scandals that involved data harvesting of 50 million Facebook profiles.
“Facebook is already in the hands of over a quarter of the world’s population, it is imperative that Facebook and its partners immediately cease implementation plans until regulators and Congress have an opportunity to examine these issues and take action.”
The senate banking committee plans to hold a hearing that will address concerns over data privacy and potential risks of the Libra project on July 16.
Facebook’s past scandals
Another issue dogging the Libra project is Facebook’s past scandals which involve user data mishandling. According to Forbes contributor Enrique Dans, Libra has great potential; but in the wrong hands serious damage could be caused. According to him, Facebook has the worst reputation when it comes to privacy along with ethical standards. With its history of mishandling data as was the case with Cambridge Analytica, people fear that with their money now involved; the same mishandling could recur.
Since Libra will be an open source Blockchain, allowing third parties to develop on it in a bid to identify bugs on it; people are concerned about security. A lot of people in the space are of the opinion that by allowing anyone to build products with access to billions of users, the project could become a major target for malicious actors. Hackers could possibly just easily create wallets and steal money from other users.
Libra is not a real Blockchain
Libra has also been criticized for not being a real Blockchain. Notable crypto enthusiasts such as John McAfee have termed it a “Grotesque distortion of cryptocurrency”. This heat is being caused by the fact that Facebook has not decentralized its currency. Libra does not offer any benefits of distributed governance that is common with most Blockchain platforms.
Libra may not really come through for the unbanked
Facebook’s claims of seeking to help unbanked people in developing countries such as Nigeria, Bangladesh, Indonesia, India, and Mexico, are opposed by the fact that some of these countries have slapped bans on Facebook. A lot of developing countries also have harsh laws towards cryptocurrencies.
Though there is a legitimate argument that Libra can make international payments in emerging markets cheaper and quicker, Facebook’s data harvesting past will make the cryptocurrency a hard sell. Some experts argue that if the issues above are handled and dealt with in time, Libra has the potential to dominate the market and kill off competition.