Earlier today, Facebook unveiled details about its previously-secretive cryptocurrency project known as Libra.
The introduction of its own cryptocurrency truly provides a boost of credibility and legitimacy to the wider blockchain community. Surely, the skeptics will slowly retreat, and the general public will recognize the lasting presence of blockchain and cryptocurrencies. Libra is an overall positive development for the crypto space as it matures and begins to appeal to a wider user base.
Facebook’s plan is to launch what they’re calling the Libra Association, which they claim Facebook isn’t behind (yea right!), which will consist of 28 founding members at first. Some of these founding members include the venture capital firm Andreessen Horowitz, Visa, Mastercard, Spotify, Uber, eBay, and Coinbase. These founding members will act as nodes on the permissioned blockchain that Facebook has built and will work to validate transactions on the network.
When it launches in the first half of 2020, Libra will be immediately made available to Facebook’s more than 2 billion worldwide users through its implementation in Facebook Messenger and WhatsApp. This means that Libra could almost instantly become the most-used cryptocurrency in the world.
Libra also has the potential to do much good in the developing world by enabling access to financial services for those who are unbanked and allowing migrant workers to send remittances without the costly fees that have become the norm.
However, Libra also carries a long list risks and downsides.
By opting to select their node operators, Facebook is forgoing the community-oriented spirit of decentralization. Not anyone can just become a validator on the Libra blockchain, but rather this is limited to only large private-sector companies (which in theory, defeats the ideals of a decentralized, blockchain based system).
Additionally, user privacy and security should be top-of-mind considering the myriad of past controversies and scandals Facebook has found itself in.
However, the stakes this time around are substantially higher. With Libra, Facebook would have more than just access to people’s pictures, interests, and locations. It could control individuals’ entire financial lives.
Therefore, Facebook must do something it hasn’t yet been able (or willing) to do; it must put its users ahead of profits. Which let’s be honest, is unlikely.
The hacking or misuse of people’s sensitive financial data and information would be disastrous and have much broader implications beyond Facebook’s previous data-privacy blunders.
Facebook should be applauded for jumping into crypto, but their presence should be met with a healthy amount of caution and skepticism.
They’ve got a lot to prove.