Libra Coin’s Biggest Hurdles
Libra Coin’s, it is the most significant initiative from Facebook yet. The social media giant has received a barrage of complaints from national regulators and worldwide governments. Recently, Mark Zuckerberg had to attend a public court hearing on Capitol Hill to speak about Libra. Twenty-eight companies, including Facebook, are managing project Libra. There are multiple reasons as to why the social company is in their current predicament and why their digital currency is being banned in countries like India.
Where did the issues begin?
The issues for Libra begin more than a decade ago when a man named Satoshi Nakamoto sought to resolve a severe problem with cryptocurrency. MrNakamoto wanted to create privacy for digital payments, allowing for the security of offline banking transactions to be available online. The idea was simple: traders and investors would need to prove their identity to oblige in digital sales with other online consumers.
There hasn’t ever been exact identification with cryptocurrency and blockchain services. The implementation of Satori’s idea would allow for money laundering and white-collar criminals avoiding law enforcement to be terminated. The concept of Nakamoto’s approach hasn’t been spoken of for more than a decade until Facebook’s Libra arrived. Due to the privacy concerns of Facebook, government financial agencies are concerned about the protection of consumers. Finance regulators globally are creating legislation that will require Facebook have the utmost regards for client safety and data protection. Ultimately, their issues derive from a combined lack of security in cryptocurrency and a lack of data protection on Facebook’s end.
Facebook’s goal with Libra is to bring banking services to more than two billion people in developing countries, which is admirable. The lack of education, poor credit scores, and uncertainty of government-issues ID’s in these developing countries could mean Facebook is taking advantage of these consumers. Most people in these developing countries cannot confirm their bank accounts or even qualify for them. Federal agencies want to ensure that Facebook cannot permit unconfirmed bank accounts and sell the banking information of these third-world citizens. International law is being created, which would also stop Libra from be transferred through global banking networks.
However, twenty-seven companies are maintaining Libra and fighting to defend the statement that Libra is safe for all. Companies like PayPal and Uber are connected to Libra. Many speculate that regulation is being implemented out of fear from billionaires that operate Wall Street and global financial markets. None of them wants their stock portfolios being affected due to Libra.
Financial agencies working with the government are implementing legislation that will require all Libra coins to be identified to the impending client by the trader whether it’s a single Libra or single Bitcoin. This is a piece of legislation that will affect all cryptocurrencies. This will allow buyers to know if that Libra coin has been involved with any illegal activities. Buyers will be able to prevent themselves from purchasing an illegal bitcoin, which would’ve been held responsible to that buyer and result in the utility of that coin being terminated. Implementing these three pieces of legislation will guarantee that consumers using Libra will be protected and that financial data won’t ever be comprised. Ultimately, the safety of the global financial markets is what matters most to the world’s governments.
Facebook Needs to Pay Attention
Facebook needs to look at how Bitcoin was affected by privacy standards. This cryptocurrency couldn’t provide clients with enough privacy in its initial debut more than a decade ago. Bitcoin was first managed in a public ledger format, meaning that the Know Your Customer procedure was implemented. This allowed for Bitcoins to be traced and connected to past transactions, identifying clients of any wrongdoings with the currency. However, it didn’t stop prior clients from using that Bitcoin in correspondence with illegal activity.
This led to numerous problems for clients and caused for Bitcoin to drop significantly in value. Other cryptocurrencies like Monero and Zcash took advantage of the drop, creating stronger privacy standard. For years, Zcash and Monero battled against Bitcoin for the top position in the crypto space. If Facebook doesn’t abide by the legislation being created by worldwide regulators, then this safe issue will happen for the social media giant.
The Financial Action Task Force will review any cryptocurrencies, stablecoins or fiat coins that don’t obey the upcoming legislation. This global task force was built to meet the demand for reliable security for digital currencies.
The critical problem with Libra is the fact that it’s not being built on a centralized, permission-less system. This system cannot fully assure clients of privacy, as identified ledgers maintain nodes with authorized validators. Financial information is spread from the client to the ledger to the validator, with Facebook being aware of each transaction with that Libra coin. Furthermore, the 28 members associated with Project Libra are requiring that consumers identify themselves being transacting. This means that sales won’t truly ever be censored. Facebook will claim that they need identification to ensure that radicalized cells and illegal businesses aren’t using Libra. Many speculate that ID will require the most out of Chinese users.
David Marcus is the CEO of Calibra, the conjoined company that is running Libra. He’s agreed publicly that his company will abide by the KYC Requirement and comply with finance regulations with anti-money laundering. Most governments are taking Mr Marcus at his word, but some aren’t. Facebook & its subsidiaries have promised privacy before, only to fail on that promise.
One of the countries not taking Marcus at his word is the United States of America. The country is in a state of paranoia when it comes to privacy and data collection concerns relating to tech companies. Right now, it will be hard for Facebook to maintain Libra unless the company isn’t correlated with the coin during marketing. Marcus, Zuckerberg and other Facebook executives have spoken with American officials. They’ve promised that whatever legislation is created, Calibra and Facebook will follow.
What Do We Want?
It’s impossible to ask Facebook to give consumers complete privacy, but also assist with finding criminals that are laundering money through Libra. Finding those criminals would require information, which wouldn’t be attainable unless some of that criminal’s data were known. The answer for Facebook is combining a series of technologies, influential system design and right marketing strategies. This will allow for the social media giant to have significant public interest across just not the United States of America, but the world as a while. Unfortunately, no exchange or cryptocurrency coin has ever combined these three aspects perfectly. If anyone could do it, it’s Facebook.
The hope for all of us is that more people will begin to become knowledgeable on cryptocurrency and that sovereign legislation will be more open-minded, while also demanding security of the highest standards. Using this sort of model would protect personal identities while also ensuring that criminal behaviour would be terminated. For now, the fight for Facebook to be regulated still emerges. Where the battle will end, nobody knows.