Various experts in the cryptocurrency have, on social media, been revealing they aren’t worried about Facebook’s new stablecoin, set to be named Libra. According to them, the cryptocurrency may be backed by a giant corporation, but won’t compete with the likes of bitcoin.
The social media giant’s cryptocurrency, according to recently revealed information, 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, going as far as offering sign-up bonuses.
An allegedly leaked blog post sees 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.
So why is Libra not a threat to Bitcoin, Ethereum, and other cryptocurrencies, according to experts? 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 one of the biggest companies in the world.
Facebook’s Libra Lacks Features Bitcoin Has
He noted 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. The system is closed, and connecting applications to it or trade it in independent markets is also impossible with Facebook’s approval.
Moreover, the cryptocurrency expert added that 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.
Facebook’s cryptocurrency is also not neutral, because it “very much cares,” because of regulatory restrictions, who the sender and the recipient of every transaction is, and what purpose each payment has. Because of this, it’s also not censorship-resistant, as the social media giant has to censor transactions under the law.
So it's not an open, public blockchain. It's not a cryptocurrency. What it is, is a banking payment system implemented by a social media surveillance company.
Charlie Shrem, a renowned cryptocurrency entrepreneur seemingly agrees with Antonopoulos, as on social media he revealed he sees “FacebookCoin” as an attempt by the traditional financial system and big tech to “lure people away from Bitcoin.”
I'm just gonna say it.
I think the “FacebookCoin” is an attempt by big tech, banks and credit card companies to lure people away from #Bitcoin into their “better, easier, crypto”, which is nothing more than a fiat coin being masqueraded as crypto.
Millions will be fooled.
— Charlie Shrem (@CharlieShrem) June 14, 2019
Facebook’s Cryptocurrency Will Threaten Banks, Not Bitcoin
Per Antonopoulos, 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.”
Facebook’s crypto is, in fact, challenge these as it’s “better at manipulating the dopamine receptors of its users and surveilling them to determine what preferences they have.” He stated:
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.
Personal freedom, the author concluded, isn’t going to be given to users by Facebook. The company won’t also provide them with access to the financial system, as it’s a system made for those who are already included in it.
Bitcoin and other cryptocurrencies, on the other hand, are going to help bank the unbanked and give people financial privacy. The flagship cryptocurrency lets users transact without fearing governments may freeze their bank accounts, and without fearing their transaction may be censored.