Facebook’s latest brainchild, Libra coin, is coming in for increasing scrutiny from industry regulators as it aims to become globally recognized legal tender before the end of 2020. However, this new cryptocurrency will be quite different from its counterparts. In fact, many have argued that Libra isn’t a cryptocurrency at all because it won’t suffer from any of the usual cryptocurrency volatility that defines other virtual currencies such as Bitcoin or Ethereum.
So what exactly is it?
Libra coin is a virtual currency launched by Facebook (with the help of many other big hitters such as Uber and PayPal) that they hope will become a singular global currency used for payments all over the world before the end of 2020.
This (they hope) will open up large parts of the developing world who have no access to banks or financial services, allowing them to make payment online for the very first time.
Firstly, this is not a coin designed for speculators interested in gaining a return on investment. If launched, this will be launched as a so-called “stablecoin” as it will be backed by government bonds and real currency reserves. Minimal price fluctuations will see Libra coin behave much like a traditional currency, making it suitable for day-to-day purchases.
Whilst it will use a decentralized blockchain structure much like Bitcoin, the nodes required for processing transactions will all originate from servers provided by launch partners such as Facebook and PayPal. This will provide superior speed for processing transactions when compared to the completely decentralized bitcoin network, but it’s got both cryptocurrency fans and regulators twitchy.
Firstly, both crypto-fans and regulators have rightly pointed out that the blockchain structure behind Libra coin will be owned by a small club of mega-corporations. With recent privacy scandals rocking Facebook, people are worried that both they, and other companies involved in operation of Libra coin, will mine payments data for their own potentially nefarious purposes.
What’s more, to be accepted as legal tender globally, Facebook will need the help of every participating country’s central bank and policy makers. France has already declared that minting new currencies is the right of countries, not companies.
Facebook is also already considered an already ubiquitous company by many governments. This step into the financial services sector has seen antitrust lawmakers in both the US and EU launch investigations into Libra coin’s ability to force out other currencies, monopolizing the payments industry.
The answer is yes…and no.
Yes, Libra coin is a virtual blockchain-based currency. However, it will not perform in the same way as others do within cryptocurrency markets. This is a coin that will remain stable so that it can be easily used as a uniform method of payment across the globe.
With that in mind, Cryptolico CEO Jeremy Parkes has already stated on the record that if the Libra project gets the green light from industry regulators, he is willing to hold Cryptolico funds in Libra coin.
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