Facebook finally unveiled their long-awaited cryptocurrency, Project Libra, to the masses, however, the reception didn’t go exactly how they hoped. According to Facebook’s representatives, Libra is a new type of digital money designed to make it easier for the masses to enter the world of cryptocurrency.
Since the first announcement of Facebook entering the crypto market, people have been very critical due to the recent Cambridge Analytica data scandal. The reveal of illicit harvesting of personal data and the lack of security that people felt afterwards countered the main appeal of cryptocurrencies.
The most successful cryptocurrencies are known for using a decentralized blockchain system in order to ensure the security of their users. One of the main benefits of such systems is its organic nature. The lack of centralized authority makes the system immune to government interference and manipulation.
Although Libra won’t be as centralized as Ripple, it will still be controlled by a collection of large organizations. The consortium of companies backing Facebook’s new project includes financial and tech giants such as Mastercard, Visa, Paypal and reportedly even Uber.
The centralized nature of the system will allow these companies to be the only ones who can mine new coins and destroy existing ones. The unreliability of a centralized system combined with Facebook’s use of public information for political advertising purposes has lead many to raise security concerns regarding Project Libra.
“If you’re concerned with Facebook knowing too much or having too much access to your private data or social graph, the GlobalCoin will give Facebook even more direct access to your financial information,” Phil Chen, the decentralized chief officer at HTC, said in an interview with the Sun magazine.
He described Facebook’s entry into the crypto market as a dangerous power grab that won’t only reveal people’s transactions to the tech giant, but also will give Facebook direct access into people’s wallets and wealth. While Facebook’s last scandal revolved around people’s interests and birthdays being revealed, a security breach this time may result in many innocents losing most of their wealth.
France’s finance minister Bruno Le Maire also voiced criticism in his interview with radio station Europe 1. He claimed that the launch of Project Libra will allow Facebook to collect even more data about its users, however, Facebook representatives denied those claims. According to the representatives, the data collected by Calibra, subsidiary to Libra, won’t be shared with Facebook and won’t be used for targeted advertising.
While in case of a security breach, the Calibra custodial wallet will refund the stolen money, the Libra blockchain itself is rather different. Outside of the custodial wallets, people won’t have the opportunity to return their stolen Libra coins. This combined with a lack of vetting on the end of developers is a ticking time bomb for the inexperienced users.
Project Libra has the chance of becoming an enormous venture within the history of social media. The introduction of billions of users to the world of crypto may lead to revolutionizing changes within the global financial landscape, however, Facebook’s past is hard to forget. While many new users might be eager to partake in Facebook’s project, the experienced cryptocurrency users will keep their distance from Libra at least for the time being.