Facebook’s Libra announcement has many people talking about the company’s new cryptocurrency, yet experts are claiming it isn’t a cryptocurrency at all. Bitcoin, a true cryptocurrency, is decentralized. Libra will have at least 28 major corporations, the Libra Association, controlling it and running the approximately 100 servers. With Bitcoin, there is no central authority which can freeze your funds, prevent transactions, block users and cancel transactions. The Libra Association can do all these things. It isn’t a surprise since major corporations like Facebook and Uber don’t want to be associated with money laundering or facilitating the purchase of illegal goods.
Anyone with the computing capacity can join the Bitcoin network and operate a network or mining node. The Libra Association has members who paid at least $10 million to join the network and run a node. Association members will earn dividends from the interest on the government-backed assets which make Libra stable. Libra currency holders do not earn interest. Detractors say Libra is nothing more than an IOU for the currency backing it. It is privately issued currency which offers a low-risk, high return investment opportunity for Libra Association members.
Facebook’s stock is rising as Libra is seen as a potentially significant source of revenue. Even if the fees are low, Facebook has two billion global users who will probably try Libra before other cryptocurriencies, especially with Facebook’s marketing ability. Libra could attract users would shy away from Bitcoin and other less stable digital coins. Facebook isn’t planning on making money off Libra, however, they are creating Calibra, a digital wallet which will be a money-making venture.
As it stand now, Libra is on hold while U.S. lawmakers to review the project. They are especially concerned with Facebook’s security features, considering the company’s high-profile data breaches. Still, no one expects the delay to last long.
