Libra, the new cryptocurrency announced by Mark Zuckerberg, has sparked controversy even though it has not even been released yet. And this controversy is occurring all while Facebook is in hot water over the company’s sharing of user data and decision to allow advertisements containing lies about politicians to be run on the site.
Zuckerberg plans to have the currency released sometime in 2020, meaning Facebook users could make online transactions using the currency on the social media conglomerate as soon as next year. According to Libra’s website, the goal of the currency is to be, “A simple global currency and financial infrastructure that empowers billions of people.” Additionally, the cryptocurrency aims to have a stable value, which is a contrast to Bitcoin.
The currency has been criticized by many influential people, including John McAfee, the developer of McAfee antivirus software. While Libra describes itself as a decentralized database, McAfee believes that it actually is not decentralized. Therefore, Libra would track user spending of the currency rather than following the original purpose of cryptocurrencies like Bitcoin, which is to provide an anonymous pathway for spending currency.
According to McAfee, Libra would use the controversial information collected by Facebook on users and include purchases into this database. However, it is also possible McAfee has a bias considering Libra would be a competitor to McAfee DEX, which is his own cryptocurrency.
But how would Libra even work? Well, its stabilized value would be supported with some of the world’s most powerful currencies, including the US dollar and Japanese yen. This currency is supposed to be for all companies, meaning that it would not be isolated to a Facebook-only cryptocurrency. The currency would be used to pay for things such as ads on Facebook. Libra’s current structure allows for an infinite amount of the coin to be in circulation because every time it is purchased, it would be backed by a bank dollar. Subsequently, Libra will have the capacity of generating interest that can pay its owners back.
Libra is currently being developed by a Swiss non-profit. This means that before it can be launched, it would need to be approved by the Swiss association. Not only that, but banks would have to agree to back Libra afterwards. Calibra has been developed by Facebook as a subsidiary to eventually make Libra available to users.