June 20, 2019
A few days ago, Facebook presented Libra, a blockchain-based cryptocurrency project.
After the inception of Bitcoin around ten years ago, we got more and more used to new cryptocurrencies being presented every other day. Often those projects are created by small teams of people, often anonymously. Facebook’s announcement is very different since Facebook is a huge company and has partnered with many other huge companies for this launch.
I’m very skeptical of Libra, and I think it will not succeed in the long run. In fact, it already starts with big challenges, including the fact that most people do not trust Facebook. Differently from many companies, Facebook is used by many people, but it is not generally trusted, and the base requirement for the success of any kind of currency is the trust in the entity behind it. Libra will be managed by the Libra Alliance and not Facebook directly. Still, so far, we have seen a much more significant presence of Facebook than any other Libra Alliance member, so easily Libra will still be referred to as “the Facebook cryptocurrency” many years from now.
Libra will be backed by multiple currencies, making it a planet-level stable currency, but I’m not entirely sure that this is a good idea. On the one hand, it reduces the inflation/devaluation risks of a specific currency, but on the other hand, it will be stable to a mean value that is not representing any of their users.
Like many other cryptocurrencies, my impression of Libra is that it’s a project that offers a solution to an issue that people do not perceive as such. They might be successful, but a massive change of perception will be needed before that happens.