Why Facebook’s Libra Cryptocurrency Is In Trouble

Why Facebook’s Libra Cryptocurrency Is In Trouble


I actually don’t know if
libra is going to work, but I believe that it’s
important to try new things. When Facebook first
announced it was getting into the crypto
business with a basically unregulated currency called
libra, the reaction from Wall Street and
government bankers was about as expected. Libra raises
a lot of serious concerns. I’m not a big
fan of what they’re doing there. I think it’s
a big mistake. It was a neat idea
that’ll never happen, and I have nothing else to
say about it. Libra is in trouble. The social media giant had
lined up a long list of corporate backers
for the initiative, including major players in
the payment space. In early October 2019,
PayPal became the first company to back out
of the libra coalition. That led to an exodus
of other companies from the project. MasterCard, Stripe, Visa
and eBay all followed PayPal and
ditched libra. So, why are all
these companies ghosting Facebook’s digital currency all
of a sudden? First, let’s explain how
Facebook got into another mess like this. I like the libra concept, but
you got to drop it. It’s clearly doing more
harm than good. Facebook first announced libra
in June 2019. Introducing Libra, a
new global currency. It formed the Libra
Association in Switzerland to run the cryptocurrency project
and lined up 27 companies to oversee it. Facebook also set up
a subsidiary called Calibra, designed to host the
financial services and payment software built on
top of the libra digital currency. Why did
Facebook get into crypto in the
first place? Facebook is big.
It has 2.41 billion monthly
active users. That’s a huge base. Even if a quarter of
the users ended up using Libra for payments. That’s
600 million people, about twice the population
of the United States. Facebook, though, also has
a ton of baggage. Think 2016 presidential
election and Russian hacking kind of baggage. So, when a company that
big and that influential plans to introduce a
product that could potentially disrupt the
global financial community, you can
see why U.S. lawmakers are paying even
closer attention to the social media giant. This is Facebook’s currency
chief David Marcus testifying before the
House Financial Services Committee back in
July 2019. The reason we designed libra
in such a way that Facebook will only be
one among 100 different members of the Libra
Association and we’ll have no special privilege, means
that you will not have to trust Facebook. Well except, Mr. Marcus, you know
better than that. You know that only Facebook
has access to 2 billion people and all, all
to say that, that you are just one of many
is simply, is simply not true after people’s data
and private messages have been stolen. And this
is Facebook CEO Mark Zuckerberg testifying before
the House Financial Services Committee about
the proposed cryptocurrency in
October 2019. I want to be clear. Facebook
will not be a part of launching the libra
payment system anywhere in the world, even
outside the U.S., until the U.S. regulators approve. Lawmakers
are really, really nervous about Facebook
getting into digital currencies. Libra could be
misused by money launderers and
terrorist financiers. Cryptocurrency such as
Bitcoin have been exploited to support billions
of dollars of illicit activity. Facebook designed libra to
be a digital global currency. Like other
digital currencies, libra will be built on top of
a blockchain or a digital ledger. Unlike other
cryptocurrencies, libra would be backed by a
basket of real world currencies. That would
stabilize its price, protecting it from wild
swings seen in the bitcoin market. The libra
reserve will hold bank deposits and short-term
government securities for every libra coin
created online. If all goes according
to Facebook’s plan, users would have a virtual wallet
where they could buy, sell, send and receive
libra through platforms like Facebook or
Instagram or WhatsApp. And, those payments would
move within seconds for small fees. With bitcoin
transactions, it could take several minutes to
confirm a transaction. And in some cases
cost a few dollars. Bitcoin is known for
its volatility and steep price swings because it
isn’t backed by government. That means things
like inflation and monetary policy don’t
influence its value. Instead, cryptocurrencies move
with supply and demand and basic market
forces, fear and greed. Bitcoin, for example, has
a fixed supply. The total number that will
ever be minted is hard-capped at 21 million,
and experts say that hard cap won’t be reached
for another 120 years. Facebook says all that
volatility wouldn’t happen with Libra because it will
be backed by a bunch of currencies, effectively
maintaining a stable price even when
demand changes. I think Libra is being
designed right now to be spent because it’s a stable
coin and it’s pegged to a basket of currencies,
and so most people today are going to assume
that people will be buying burgers or coffee. That’s Tom Lee. He’s head of research
at FundStrat Global Advisors, an independent
research firm. He says Facebook entry
into cryptocurrencies is a huge positive. It brings a
lot of credibility to space, but also with its
2 billion users, it’s a massive increase in the
addressable market, and arguably one of the
biggest headwinds for crypto adoption has been the user
interface or the ease of sort of
finding on ramps. Libra would use blockchain
technology, which is what all cryptocurrencies
run on. The blockchain is a
secure, digital collection of financial accounts. So, it’s basically a
decentralized bank ledger. There’s no middleman. The
currency is exchanged person to person and
recorded on the blockchain so you can see
who owns what. Traditionally in crypto, anyone
could access that blockchain, but not
with Libra. This is David Yermack. He chairs the finance
department at New York University’s Stern School of
Business and he teaches courses
on cryptocurrencies. It’s very different
than cryptocurrency like bitcoin or ether, which
is decentralized, has no leadership and relies on
a community of people who compete to build the
blocks that update the transactions. Because of the
design of something like bitcoin, it really
can only accommodate a small amount of traffic,
but something with central management like libra
could really grow to almost any size
that you wished. Libra would be
permissioned, which means transactions can only be added
to it by a group of trusted parties. That’s where the Libra
Association comes in. It’s the Swiss-based consortium
of nonprofits and companies like Lyft,
Uber and Spotify. Each partner of the
Libra Association invested a minimum of $10 million
into the project. David Marcus is the
Facebook executive leading the blockchain initiative, who
also once served as the president of
PayPal, previously testified to Congress that libra would
work more like a traditional currency than
a cryptocurrency. The intent of libra is
not to compete with other cryptocurrencies. It’s to compete
with the real currencies issued by
the central banks. That raised a red
flag among government regulators. And that’s a
big reason why libra’s corporate backers
began fleeing. Zuckerberg took heat from
lawmakers looking for clarity. Given the company’s
size and reach, it should be clear why
we have serious concerns about your plans to
establish a global digital currency that would
challenge the U.S. dollar. For the richest man
in the world to come here and hide behind the
poorest people in the world and say that’s who
you’re really trying to help. You’re trying to help
those for whom the dollar is not
a good currency. Drug dealers, terrorists,
tax evaders. He acknowledged the risk
of digital currency like libra poses, but also argued
it could ensure the U.S. position as an
innovative financial world leader. I just think that
we can’t sit here and assume that because America
is today the leader, that it will always get to
be the leader if we don’t innovate. And innovation
means doing new things. And that does mean
new things have risks. And we need to address the
risks and we need to be careful in doing that. But when pushed to
explain why corporate backers exited the libra project,
Zuckerberg put the blame on risk. Why
have they departed? Scores of stable partners
have dropped out. Why? Well, Congresswoman, I
think you’d have to ask them
specifically for- Why do you think
they dropped out? I think because it’s a
it’s a risky project and there’s been a
lot of scrutiny. Yes, it’s a
risky project. And when asked about
potential privacy concerns, he told Congress there
are millions who trust Facebook. Billions of people
come to our services because they trust that
they can share content, messages, photos, comments with
the people they care about. And more than
100 billion times a day, people do that. They share something with a
set of people because they know that that content
is just going to reach the people that
they want it to. So I think that if
we’re able to move forward with this project, there may
be some people who who don’t want to use
it because they don’t trust us or don’t like us. And that’s one of the
values of having an independent association where there
will be other competitor wallets and
other approaches, too. Zuckerberg spent most of
the hearing reassuring lawmakers libra wouldn’t
launch without approval from U.S. regulators. Facebook’s push into digital
currency served as a big wakeup call for
lawmakers and central bankers. It’s pitting Facebook
against the U.S. and other governments. And Facebook is
losing so far. In September 2019, France
and Germany both agreed to block libra. The
government said, “no private entity can claim monetary
policy, which is inherent to the
sovereignty of nations.” A few weeks later, libra
began to lose its corporate backers. PayPal was
the first company to leave in
early October 2019. Days later, two senators
on the Senate Banking Committee sent letters to
the CEOs of Visa, MasterCard and Stripe to
express concerns over their involvement in
the Libra Association. Senator Sherrod Brown of Ohio
and Brian Schatz of Hawaii told companies “to
proceed with caution” until Facebook provides more
details on the risks posed by libra, like
financing terrorism and disrupting the global
financial system. A few days after the
senator sent the letters, eBay, MasterCard, Visa and
Stripe announced they would leave the
Libra Project. The U.S. Treasury Department
had also been privately pressuring libra’s
corporate backers, according to the
Wall Street Journal. The opposition to libra
is coming from countries with established financial
and payment systems, where a majority of
the population already has bank accounts. That’s not really
the kind of user Facebook has in
mind with libra. It’s going after the
world’s unbanked population. You know, that unbanked world
is a lot larger than we all appreciate
because anyone living in the U.S., you know, has
pretty simple access and low-cost access to banks. Facebook points to statistics
that show 31 percent of adults in the
world don’t have a bank account. That’s about 1.7 billion people globally. And those numbers are
worse in developing countries and even
worse for women. Turns out, the unbanked
community of 1.7 billion people can be
leveraged through reliable internet infrastructure and
mobile phones. Those two things alone have
given rise to a new generation of financial
services without requiring fancy tech. 1.1 billion of those 1.7 unbanked people have
a mobile phone. For example, in
sub-Saharan Africa, simple, text-based phones have
popularized mobile money accounts. So, Facebook has a
lot to gain from winning over the unbanked
with a global payment service based on its
own digital currency. It’s not just Facebook
making waves in the digital currency market. China’s government also wants
a piece of the action. China’s central bank
has made some very public announcements that
they’re going to compete with the private
digital currencies in their economy by having a
crypto version of the renminbi, their
own currency. And there have been a
lot of central banks around the world researching this over
the last five or six years. The People’s
Bank of China announced in August 2019 that it’s
close to launching its own digital currency, saying
the rationale behind the move is to
protect its foreign exchange sovereignty. Some say the
move would encourage the worldwide use of
the yuan, the Chinese currency and the deputy
director of the People’s Bank of China’s Payments
Department said this currency will have similarities
to libra and would be as safe as
the central bank-issued paper notes Libra is really trying
to mimic what has already occurred in China,
where two social media companies, Tencent and
AliBaba, have launched payment services. They’ve run very, very quickly
and have begun to push aside the regular
banks as sources of payments for people. And if you look at
how quickly the Chinese social media companies have grown
and the fact that they’re now going abroad
into other countries, there seems to be
an opportunity for companies like Facebook, Google, Amazon
to create a very similar service. China’s central bank plans
to launch this digital token through a two-tier
system, where both the People’s Bank of China
and commercial banks would be legitimate issuers. All this means that Facebook
doesn’t just have to contend with the opposition,
with regulators and politicians. It means the
social media giant is also in a race against
time with governments that want to build their
own digital currencies. While libra still may be
in deep trouble, despite Zuckerberg’s performance on
Capitol Hill, the promise of digital currency
should live on, according to Tom Lee. I mean, I think the
future is really bright for digital assets. one, because I think it
is reducing a lot of friction in traditional
financial architecture. The average person spends almost
a month of every year paying for the
right to use banks. So, I think that that’s
a level of value capture that’s high, and so digital
assets are going to help sort of create
productivity around that. No one knows when
the federal government will enact regulation that would
impact how the libra coin operates or what
that regulation would look like. All they do know
is it’s coming at some point. Some even speculate
Facebook won’t be the first public tech company
in the U.S. to issue a currency. I don’t think other
majors Silicon Valley technology companies are far
behind, so I think Facebook is the first, but
I think we’ll see many other versions.

Author:

100 thoughts on “Why Facebook’s Libra Cryptocurrency Is In Trouble”

  • I guess this is a fake Zuckerberg clearly.

    Looks like a robot answering in a suit.

    Need to check the video
    Looks straightjacket and clear cut as a robot to me….

  • Wow, they want to take away the government's ability to issue currency and influence their economy. Cool. Just look at how past French colonies whch lost their control of their own currency is like. Those countries are stagnating. Zuck is a brilliant man.

  • This payment system will be operating very soon. Libra China. Libra Russia. Someone will build the system and that country will have the dominant payment system on earth.

  • This is a very bald move! it's not gonna be easy because the elders always pull things back… so the younger generation have to waste the best part of their life being patient… this may be a nesessary tension but a very time consuming one! and we can definetly do better…

    Eighter way projects like libra are the next sound step in diluting the influence of the government! and make way toward a world lead by collective morality and values instead of intermediaries and corruption…

  • Andrew Lohbihler says:

    Its interesting that the 1.7 Billion unbanked people are called the terrorists and crooks of the world. Clearly the opponents of the Libra are the rich people and their bankers that see this as a threat to their wealth.

  • Mineski Pembo La Funyeta Rizal Makatol Makati 1208 says:

    Not really!’ We here in the Philippines the reason why we use facebook because all of its competitors are gone!!

  • Here in Latin America a lot of people don't have credit cards, and this stunts e-commerce, so I was actually rooting for libra. I sell home plans online and my clients are mostly Latin Americans.

  • Seriously, this would have greatly helped ecommerce in LatinAmerica. I hope those companies can regroup without FB's involvement, so they can create a new global currency.

  • If the bank cannot print currency, how do they lower interest rate? The modern economics doesn’t work with crypto’s. If Libra replaces dollar, then Facebook replaces the Fed. America needs a technologically advanced government, and that government will be Facebook? No way it can pass in front of the congress.

  • Zuckerberg wants to make all currency more equal, easy to use and accessible to all. Governments: well we can't do that that will break our currency war, our control and limitation of who can bank. If you think outside the current system Zuck has a lot going for him.

  • This is what happens when the Jews are ruling the world but then abusing the world. They still haven't learned from God's wrath on them, have they?

  • Jaratpon Pongpaitoon says:

    Nice, congress is really holding facebook accountable. Hold them back a little longer please, Tencent and Alibaba need more free time to develop their foot hold.

  • I Dont Read Your Replies says:

    Notice how it's only the 1% boomers who tell you why "crypto" is bad. The only thing "bad" about cryto is that the banks/1% don't get any of that money (this is a very good thing).

  • Sandra Mattingly says:

    It is important to note that Utopia is not a whitepaper, some abstract idea or statement of intent. This is a fully functional software product ready to be used.

  • When I first got into cryptocurrency, I made some grave errors but I would say putting the cart before the horse. The first step should be educating yourself and being in the right community so that you don't just learn by your effort but by the efforts of others who are ahead of you already with respect to the tips, tricks and strategy of profitable trading. That said, to make great profit off crypto is almost as easy as it is to lose money with the wrong strategy. Apart from self-education, find a coach or mentor to follow in the space and then, see how you can copy his trade patterns and signals simply by asking him. Following this guide, I grew my little portfolio of 6.5 btc to over 25 btc in just 3 month. This I did by carrying out some findings by researching on some select successful traders and then settling for Mark Jean . After making contact with him, he let me in on his system and I traded using his patterns and signals but he first made sure I had the right foundation by starting me with a few basic questions which of course is how he gauged my experience level and fashioned out a pattern for me. My suggestion is to find such a guide and get rid of emotions which would be counterproductive for you as an entrepreneur  Marktrading884 @ yahoo com or via WhatsApp: +12098817868 and telegram @ Marktrading884 if you need a very accurate guide on how to build a great portfolio and start profiting from cryptocurrency

  • Yes…. because Zuckerberg is sooo trustworthy. That's what the world needs is a cryptocurrency being spearheaded by a shady billionaire who places no value on privacy except his own.
    What could possible go wrong?

  • jan youtubehater says:

    Facebook has to launch this fake Libra, in order to be able to pay all the millions he has to pay because of his bigger failure feesbook

  • If it worked though, it might've been a huge success. In China, almost no one uses paper money any more. It's basically all through WeChat.

  • I don’t think we were ever going to be ready for something as incredible as the Internet.
    Second to God,
    and third to the devil,
    the internet has unbelievable omnipresence.
    In terms of omnipresence manageability,
    I would say that man cannot handle such an ability.
    God is pure.
    Satan is pure evil.
    And, man is insufferably ambivalent.
    Therefore, man is the only omnipresent entity that lacks true consistency.
    The human condition is the most complex and simple riddle in life.
    It’s fascinatingly tragic, to say the least.

  • BTC has market scarcity, Libra would just be one of many stablecoins. BTC's supply vs demand is why it goes up. Alts that focus on that will be better off while altcoins bleed vs BTC
    https://boards.4channel.org/biz/thread/16267334/lets-buy-more-ecash

  • The dollar is owned by private banks already. So all I'm seeing here is that they're scared Facebook and other new private businesses could compete 🤣

  • Facebook is only the "face" of Libra. They are one of the 28 founders which can go as high as 100 founders. Research Concordia for more info on Libra".

  • Currency do you hear that? Bet that flew over peoples heads hahah. Look back to 2008 when the feds just printed money like crazy. A Currency is similar to monopoly money but since it has confidence,faith, genuine and easy to make change. That's why central banks are fighting against it lmao libra would change the world.

  • This certainly does infringe on a countries sovereignty. Though I would much rather that Facebook makes Libra then China making their own currency. Facebook can be controlled by governments while China is a government. Libra must go through, otherwise China will control even more of our lives.

  • Lawmakers are so slow to adapt to new tech, wait too long and innovation will just go where it's treated best and leave them out entirely.

  • When the rest of the world turns their backs on the US dollar, the cozy 115 year rule of the private Fed will diminish when crypto currencies (currency the Fed has no control over) step in to save America's economy. What's the difference? They're both private enterprise. The problem is, the bank cartel (the Fed et al) want to be the savior, and are prepared with a new currency, the NAU, or North American Unit (like the Euro). They plan to impose a currency that is common with Mexico, Canada and the US. They're attempting a Hail Mary to take control of both Mexican and Canadian currency in addition to what they already have. THAT MUST NOT HAPPEN. We need an alternate currency to replace the cartel's toilet paper Dollar when it fails. Crypto is in common use now – may it become dominant. (Also, fear NAFTA – that's part of the Fed's game plan.)

  • You can't peg a currency to another currency. That was what caused Black Wednesday in the UK. The value of the currency unit has to float.

  • they dont want crypto because then their printing money its not gona worth nothing …. only EL Chapo the biggest drug dealer have 14 bilions worth of dollars and USA keep pressing/saying the crypto is used to terrorist … everyone that dont do or work with USA is considered terrorist but the real terrorist are USA …

  • I don't think anyone trusts Facebook but we all just continue to use it because we don't really have a choice. We should definitely not allow Zuck to be in control of this aspect of our lives the way he is with our social lives. I am a big proponent of crypto but I think we should be very careful how they are implemented in large part to insure they remain decentralized and out of the control of people like Zuck. I am also a firm believer that cryptos will never replace fiat but instead continue to operate much like they have thus far alongside fiat currencies serving their own role which may be similar but is surly not identical to state back fiat; both have their place.

  • Trying to attack the World economical system is litteraly considered in history to massive attack destabilisation of society.

    This gonna be an amazing change and Zuck can die killed by stats and army that can be Overly dangerous.

  • My life My Rules says:

    Facebook is not a tech. Company…nor a media company…

    Facebook is just a gang management company that nobody needs ….the fact that they have access to your life or manipulate human lives is a clear indication of the failure og the legal system … Probably the ONLY person who uses Facebook is Fuckerberg…

    Facebook= Dark web ….

  • Fb is a liar trying to fight another liar none of us are winning here except the elite. Its like saying u wanna lose the left leg or right leg ur not winning either way.

  • Libra does not work but it's literally "trying for fun". I'm getting smarter and smarter as I advances toward master degree in computer science this year. In that Libra's heart, It is not a decentralized network! It is not Libra. "Libra reserve is terrible idea". Lol… That's real astonishing experiment. But libra might be much better than the dollar currency system by federal reserve. the Law is necessary where the people can deal with the new crypto currency in Decentralized way. Isn't that the great solution? American people have the guns and they still have their own rights for their freedom. You can connect separate centralized banking systems as decentralized systems in block chain eventually. Voting and banking in decentralized block chain are the great idea anyway.

  • NicholasAlexander says:

    I’m pretty sure this is the exact same concept that Ripple is using, and they aren’t connected with Facebook in any way. Who would want to have they finances with Facebook? That’s like throwing your money in a paper shredder, you have no idea if it’s going to be there tomorrow or be hacked, I wouldn’t take that chance for a million dollars, let alone willingly let Facebook have access to my financial accounts or records.

  • i don';t think he learn anything, my self and other people having log in problems i posted in the facebook community help page and it gets deleted. i see scammers posting phone numbers to call but those are not deleted, no support numbers or email to reply to. There is just no help, i created a new account and the account gets disabled, facebook needs to fix their system or people will be looking something new to use…… Zuckerberg wanted to do bitcoins well if the bitcoins going to be just like facebook with no support then no one will be using it.

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