Facebook and its new monetary role: Libra impact and related concerns
Facebook has recently announced its new cryptocurrency (Libra). Libra is backed by 28 multinationals like PayPal, Mastercard, Visa, Uber, et cetera. It has been claimed that Libra will be able to solve the typical issue of cross-border payments, which still take three to five working days to be completed. Moreover, Libra is an opportunity for those 1.7 Billion of individuals who still do not have access to financial system with no access to a traditional bank.
Libra is a blockchains-based system with a unique set of properties. These include “distributed governance”, which ensure that no single entity may control the network; open access, which allow anybody with an Internet connection to participate; and security through cryptography. In particular, Libra is made up of three elements:
- Built on a reliable, secure, and scalable blockchain;
- Libra is backed by a reserve of assets that provide it with intrinsic value;
- Libra is governed by the independent Libra Association that is in charge of the evolution of the ecosystem.
The unveiling of Libra comes only three years after Cambridge Analytica scandal, which saw personal data of millions of users manipulated for political purposes. Since then, Facebook has experienced numerous privacy scandals calling in question the manners Facebook handles its user data. In such plagued context, Libra is seeking to find its position as a new global currency jeopardising future status and privacy of private financial information. Doing so, Facebook is seeking to increase its monopolistic power on personal data by accessing information about users purchasing habits while building spending patterns of its users.
Notwithstanding aforementioned privacy concerns, Libra seems to target users in developing world by providing financial stability to population with no access to financial services and banking advantages. However, the real risk of a political and financial catastrophe is more likely in those countries where Libra would be most useful. In fact, developing countries may not be able to control Libra and its monetary policy.