Cryptocurrency experts have been revealing that they are not worried about Facebook’s new stablecoin, set to be named Libra via their various social media handles. According to them, the cryptocurrency may be backed by a giant corporation, but won’t compete with the likes of bitcoin.
Facebook’s cryptocurrency is set to be backed by a basket of fiat currencies to avoid price fluctuations, and will be usable for low or no-fee payments between Facebook’s users on its platform, including WhatsApp and Facebook Messenger.
Facebook has reportedly spoken to financial institutions to form a $1 billion fund to create collateral, and is said to have spoken to merchants to get them to accept its Libra cryptocurrency as a payment method.
A leaked blog post reportedly saw Facebook criticizing existing cryptocurrencies over their failure to achieve mass adoption, and being poor solutions to store value and transact. The company is reportedly also looking to create physical ATMs for its cryptocurrency, and has asked partners to pay $10 million to run a node and validate transactions.
However, speaking to CryptoGlobe at the CryptoCompare Digital Asset Summit, the author of “Mastering Bitcoin” Andreas Antonopoulos noted there are five pillars, or five principles, to evaluate the blockchain he’s interested in:
- “Whether the system is open
- Whether the system is public
- Whether the system is borderless
- Whether the system is neutral
- Whether the system is censorship-resistant”
Antonopoulos added that taking these five pillars into account, a look at Facebook’s Libra paints a different picture. While Bitcoin, for example, is open, public, borderless, neutral, and censorship-resistant, the same can’t be said about a cryptocurrency being issued by Facebook.
He noted that Libra lacks the same features with bitcoin. It can’t be open as every participant has to be vetted, identified and authorized by the social media giant, and that individuals can’t openly join the system because of this.
Also since Facebook has to follow regulations, Libra won’t be borderless, as it’ll have to exclude specific countries from its network, while also having to track payments across borders.
According to him, Facebook’s Libra will have the “worst characteristics of surveillance capitalism, combined with all of the inconveniences, seizures, freezing, and bureaucracy, of traditional payment systems.” With banks and payments systems like Visa, MasterCard, and PayPal, he said, it competes with “very effectively.”
They’re going to threaten the banks with that. They’re going to threaten the banks because they start with 2 billion users, but they won’t threaten cryptocurrency, because the applications are completely different.
Credit – Cryptoglobe