Facebook's Libra, the new blockchain and payment system from the social media company, is the big topic in the digital currency space right now, and reactions are coming in from all corners. French Finance Minister Bruno Le Maire said the digital currency known as Libra shouldn't be seen as a replacement for traditional currencies.
Partners in the project include household names such as Mastercard, Visa, Spotify, PayPal, eBay, Uber and Vodafone, as well as venture capital firms like Andreessen Horowitz. She also pointed to data leaks, a problem that could be disastrous if Libra gets the 1 billion plus users that it hopes for.
In April, Canada's federal privacy watchdog announced plans to take Facebook to court following an investigation into the platform's privacy practices that revealed more than 620,000 Canadians had their data improperly shared during the Cambridge Analytica scandal.
Indeed, a similar crypto-based payment service, called Circle and based in Boston, has been offering free global money transfers since 2017. Bitcoin itself remains shrouded in secrecy and fraud concerns, not to mention wild value fluctuations, making it unappealing for the average shopper.
Here's what potential Libra users should know about the cryptocurrency project. The association will be regulated by Swiss financial authorities, Facebook said.
The Libra is created to be more stable than other cryptocurrencies such as Bitcoin by being backed by a reserve of real assets, the Libra Reserve, giving it intrinsic value. But the company insists that all transactions will be deeply encrypted, and "if people use Calibra or similar wallets, their individual transactions won't be visible on the Libra blockchain", per the AP.
"We can not allow Facebook to run a risky new crypto-currency out of a Swiss bank account without oversight", he said in a statement. However, Facebook says that anyone will be free to build software on top of the Libra network.
The Block reports that U.S. Rep. Patrick McHenry, senior Republican on the House Financial Services Committee wrote a letter to Committee Chairwoman U.S. Rep. Maxine Waters requesting a hearing on Project Libra.
Building a successful stablecoin could give Facebook power beyond the simple revenue stream of transaction fees.
If you wanted to send money to a friend, for example, you could do so entirely within Messenger or WhatsApp without having to leave that app to launch a second one (such as Venmo or Square's cash app) to send money. Still, if people are using Facebook products to buy things and send money, it's possible Facebook will be able to track some data about shopping and money transferring habits. Instagram messages won't be included, at least at first.
"For the time being, no privacy policies or Terms of Service are available for Libra coin".
Facebook will peg the currency's value to a basket of established currencies, including the US dollar, the euro and the Japanese yen, according to the Guardian.
Many privacy questions remain unanswered, though.
Libra did not provide details on how the accounts would work, but my guess it will be like those vending machines for mobile phones where you can add minutes to your account by inserting a few bucks.
David Marcus, who oversees Facebook's blockchain efforts, is expected to testify, according to a source in Washington familiar with the matter.
It's as if Facebook wanted to ensure everyone ahead of Libra's 2020 launch that the coin won't be another way for the company to make money off of its customers by collecting even more personal data from them.