When Libra was first announced, in our coverage we mentioned that this can truly be big but the project will face a lot of bureaucratic hurdles. Although the scrutiny is great, after all, Facebook doesn’t have a great track record when it comes to user privacy.
Recently there was a senate hearing for Libra as US lawmakers tried to determine Facebook’s entire role in Libra and how the company will form a business model around it.
What is Libra?
Libra is a Blockchain currency proposed by Facebook. “What Facebook plans to do here is to use Libra as a blanket. You use your local currency to add money in your wallet which is stored as Libra and all the transfers are in the same form as well, but the recipient can always convert that amount in their respective local currency (Facilitating Local expenditure as well).”
Libra’s value is backed by the Libra Reserve which is a collection of currencies and other assets being used as collateral. Pricing it on multiple assets and currencies is a great move because this will give it a lot of stability, economic turmoil on a single market will have limited effect.
Calibra is going to be the standalone application for Libra, which will be available on both iOS and Android. This is going to be a big part of Facebook’s digital money experience. There will be a lot of features built-in facilitating peer to peer transfers. The company will also integrate Calibra payments in WhatsApp and Messenger.
Save, send and spend your money, all in the Calibra app. Top up your phone or pay bills. Your transactions will be private and secure.
The first version of Calibra will support peer-to-peer payments and a few other ways to pay such as QR codes which small merchants can use to accept payments in Libra.
Some Of The Major Concerns Raised At The Senate Hearing
Facebook’s executive David Marcus represented the company at the hearing. One of the major concerns was obviously Libra’s association with Facebook, it is very hard to trust the social media giant with people’s money when it was so careless with their online privacy.
In response, David Marcus stated that Libra would only be launched after clearing all regulatory issues. Marcus also stated that Facebook is only one of the members of the Libra association, which in the end is the regulatory body for the currency.
The hearing committee was also keen to know how Facebook stands to benefit from Libra, answers weren’t clear from Facebook’s representatives, but they assured that the company won’t have access to any financial user data.
Misuse of the platform by bad actors was also a big concern and the committee asked if Facebook could potentially freeze such dubious accounts. Obviously, Libra being a blockchain currency is decentralized in nature, so only wallet developers have the power to freeze accounts. Facebook has to ensure that devs don’t misuse the platform.
Now Facebook asks people to trust them with their hard-earned paychecks… a breathtaking amount of arrogance.
Generally, Governments around the world don’t have a favorable view of cryptocurrency and this coming from Facebook makes it even worse.
“Perhaps Libra can bridge the payments gap worldwide, but Facebook will still need to comply with rules in every individual nation they operate in. This can be a challenge as most countries have a strong dislike for cryptocurrencies, it takes away fiscal power from the state due to its decentralized nature.”
This certainly is an uphill task and Libra might not even see the light of day, but Facebook seems very invested in the concept. Only time will tell if it becomes a revolutionary solution in the digital payments space or a forgotten enterprise.