Facebook, the giant social network, with its billions of users, is pursuing plans to build a stablecoin called Libra, alleging that it wants to "bring financial services to unbanked individuals worldwide". To make it look less centralized of a project, Facebook decided that the coin would be regulated by the Libra Association, which is a self-declared "not-for-profit" organization. Hard to believe when its founding members are, among others: Visa, Mastercard, Paypal, Uber, Spotify and Facebook. (Although some of those like Paypal have recently withdrawn from the project.)
Meanwhile, policymakers and bankers say that Libra "might risk destabilizing the global monetary order". It is not difficult to see that, for a class of privileged people that can issue money, cryptocurrency is a threat.
Now in this fight of big fish, what is the result for the common folks? Is Libra good, bad? As much as I enjoy seeing the lords of the monetary establishment struggling against this new big tech move, I don't see Libra as being beneficial in any way. As much as the cryptocurrency community dislikes centralized fiat currency, Libra is just an upgraded high-tech corporate version of fiat currency. Is more like a state telecommunications company being replaced by AT&T. Is that good? I don't know. Both suck, probably.
Is Libra a threat to the cryptocurrency ecosystem? That is an interesting point to think about. If it succeeds in being implemented, it has the potential to take over a lot of markets that would otherwise be served by other cryptocurrencies. Facebook has a large user base. If a user has some Libra in their account and can use it to buy stuff and send money abroad, why use Bitcoin or something else? On the other hand, much of the motivation for the crypto enthusiasts is absent in Libra. It's highly centralized, it's dependent on a "basket" of fiat currencies. It's also not clear if a user has sovereign possession of his funds with Libra, as it is with BTC and other cryptos. Even if they have this control over their keys, is there real freedom when the technical and political future of the currency is controlled by a bunch of giant corporations? Finally, another point that BTC and others can potentially solve but which Libra can't is that of being a good store of value. Libra is tied to the USD, and therefore subject to inflation. Bitcoin suffers from high price instability at the moment, but depending on what happens in the future, now that BTC is reaching a stock-to-flow close to that of gold plus the limited supply of 21 million coins, BTC has the potential to be a good store of value, protected against inflation.
Moreover, problems of bank runs like we are just seeing in Hong Kong now, and as we have seen in the past, could easily be avoided with real cryptocurrencies like BTC: nobody can prevent you from having access to your BTC. With Libra, can we really trust that our funds would be secure and accessible at all times?
