Facebook Libra Coin - Is it a real Cryptocurrency ?
A few weeks back, #Facebook announced its intention to launch a cryptocurrency named Libra, based on the #Blockchain technology. Really speaking, it was anticipated by many people that Facebook might come up with the platform for Money Transfer using its Social Media platform - #Facebook and #WhatsApp just like what #WeChat offers in China.
The announcement of #Libra cryptocurrency has been major news and it will be noted by the major financial institutions/bank, the central bank of the various countries and by the Government agencies across the globe. With the user base of 2.5 Billion users on #Facebook; even if 30-40% of this social media population start adopting Libra for fund transfer; it is surely going to be a major disruption in the financial payment sector.
As per the #Libra White Paper documentation:
Libra is made up of three parts that will work together to create a more inclusive financial system:
1. It is built on a secure, scalable, and reliable blockchain;
2. It is backed by a reserve of assets designed to give it intrinsic value;
3. It is governed by the independent Libra Association tasked with evolving the ecosystem.
Based on this above information from the White-paper – it looks like Libra coin has all the ingredients of the Cryptocurrency based on the #Blockchain technology. But if one read the white-paper closely, we can find the following properties:
- Libra is governed by the member of the Libra Association – which includes Diverse Businesses, Non-Profit and Multilateral Organization and Academic Institutions
- Libra’s intrinsic value is backed by the reserve of assets in bank deposits, short-term government securities in multiple currencies.
- Libra is managed by the Permissioned Blockchain (currently)
As per the basic principle of #Blockchain and #Cryptocurrency – a platform needs to be Open, Decentralized, Neutral, Secured, Maintain Privacy, No Government or 3rd party intervention and most important TRUST LESS. But, in reality, Libra does not follow these principles fully. Secondly, it is not a cryptocurrency on its own, but a fa?ade over the underlying Fiat currencies. The value of the #Libra coin is equivalent to the amount of Fiat currency it holds as a true value. It is also called as “Stable coin” and potentially remove the issue of the major volatility of price fluctuations associated with Bitcoin. As per the Libra white paper – Facebook plans to make it fully Permission less and Decentralized in next five year period and is working toward it.
Having said that, #Libra is not a real #decentralized #cryptocurrency, I still personally feel that this is really a very good and a bold step in the right direction to make the technology of #Blockchain accessible to the general population. Only time will tell the success and failure of #Facebook #Libra, but it is surely going to disrupt the payment sector of the financial ecosystem. #Paypal has already disrupted the payment sector to a good extent within the current ecosystem and technology boundaries. Now #Facebook Libra would further disrupt this sector using the ecosystem of Blockchain. I am pretty sure that there would be other #FinTech which would come up with a new use case and challenge Facebook Libra in the near further. Till then, we need to see how the traditional banking player react to this disruption.
Do you agree???