The world’s number one social media platform has recently launched its own cryptocurrency to take on the world of digital currencies. Facebook unveiled plans for its “Libra” coin, designed to offer a stable cryptocurrency that could be stored on smartphones and utilized as a form of currency for more than a billion “unbanked” consumers around the world.
A prototype of Libra coin has already been released in open source code, giving developers a chance to explore the possibilities of incorporating the coin as part of apps and services ahead of its rollout as a fully fledged cryptocurrency in 2020. A not-for-profit organization, called Libra Association, has been established to oversee the blockchain-based coin, with plans to tie it to the value of leading fiat currencies and other stable real-world assets, ensuring the long-term stability of Libra’s value.
However, there are some huge question marks regarding the long-term success of Libra coin. In stark contrast to Bitcoin, which is totally decentralized on the Bitcoin blockchain, Libra coin will be overseen by Facebook and the Libra Association. Both of whom will have a considerable say over the asset and its usage. When you compare that with Bitcoin, which has an increasing number of real-world use cases, it’s hard to see Libra ever competing in the same league as Bitcoin.
Bitcoin is starting to build a reputation for its usefulness outside of the digital world. Although many still use Bitcoin as a store of value, just like gold or silver, Bitcoin is increasingly being used to provide humanitarian aid, transcending bureaucratic hurdles such as cross-border payments and commission fees to help aid efforts get underway in countries such as Rwanda and Venezuela.
A growing number of freelance professionals in the US are also choosing to be paid in Bitcoin to preserve a greater percentage of their paycheck and avoid cross-border commissions. Libra coin will also have to go some distance to compete with Bitcoin in the entertainment sector, with Bitcoin increasingly used for burgeoning online gaming industries. Online casinos now offer classic table games with secure crypto payouts creating a fast and private banking method for gamers.
However, while Bitcoin is almost entirely deregulated in the sense of its possible use cases, Facebook will – initially – control where and how Libra coin is used. Miners of Libra coin will also have to seek permission from Facebook and the Libra Association before they can begin mining. It is, therefore, felt that Libra coin will primarily be used as a force for good to make purchases and acquisitions via Facebook’s properties.
Whether Libra has the potential to rival Bitcoin and enter the mainstream depends on the take-up of Libra’s open source code by developers. Facebook released its underlying technology to the masses on GitHub, with the aim of giving developers free rein to explore Libra’s future capabilities. In this instance, parallels can be drawn between Bitcoin and Libra, with the former also handed to the Bitcoin Foundation in its early days to be worked on by independent developers; resolving roadblocks to do with security and scalability. Nevertheless, it’s hard to get beyond the fact that Libra is a centralized cryptocurrency with a permissioned blockchain, with Libra’s users set to become heavily reliant on the Libra Association and its actions.