Facebook's cryptocurrency ambitions face privacy concerns, political backlash

Thursday, 20 Jun, 2019

While many have remained agnostic towards the venture, claiming that it won't involve "real" cryptocurrencies in any material manner, some have come out to comment on Libra.

This morning, Facebook confirmed some long-running rumors by announcing that it's about to dive into the world of cryptocurrency.

Facebook has engaged with regulators in the United States and overseas about the planned cryptocurrency, company executives said. In the developing world, where Facebook is looking for user growth and advertising is less lucrative, Libra could be the feature that first attracts a new segment of users looking for a stable, low-priced and smartphone-native worldwide banking option. Calibra, the company insists, will be a subsidiary of Facebook and a regulated financial service provider.

Last year, Facebook's data policies came into question when Cambridge Analytica, a data analytics company, harvested the private data of millions of Facebook users and manipulated for the objective of political profiling. But experts say Facebook's partnership with credit card companies like MasterCard and Visa suggest users will be able to simply buy the currency.

Others argue that Facebook is wise to relegate oversight of Libra to a consortium.

Here's what Facebook users need to know about Facebook's digital currency.

The association´s Dante Disparte said it could offer online commerce and financial services at minimal cost to more than a billion "unbanked" people - adults without bank accounts or those who use services outside the banking system like payday loans to make ends meet.

Meant to be officially released in 2020, the digital currency is powered by blockchain technology. Users will be able to convert their local currency to Libra which will be stored in the Calibra app, a valuation of the currency is yet to be determined, but the idea is that it will have a similar value to a euro, dollars, or British pound.

With Libra, Facebook is aiming to create a truly global digital currency that can help empower billions of people across the world. Also in contrast to Tether, which is being investigated by the New York Attorney General over potentially misusing client funds, Libra will be regularly audited, Marcus said. In addition, while Facebook and its partners have been talking with regulators, they haven't secured the so-called no-action letter from the U.S. Securities and Exchange Commission, which would have safeguarded them from a regulatory action amid a global crack-down on token issuers.

He welcomed the fact that the blockchain on which Libra will be based is open source and decentralised but the biggest positive for the other crypto players is the legitimacy granted by Facebook's move.

The much-hyped launch of Facebook's cryptocurrency Libra has met a brick wall of institutional skepticism as politicians and regulators take one look at CEO Mark Zuckerberg's privacy record and raise a collective eyebrow.

Financial information at Calibra will be kept strictly separate from social data at Facebook and won't be used to target ads, Calibra vice president of product Kevin Weil told AFP.

Waters, a California Democrat, said Facebook "has repeatedly shown a disregard for the protection and careful use of this data".

Set to be launched mid-2020, the Libra's aim is to disrupt the financial sector, which has largely been unchanged by the internet revolution, by making the transfer of money around the globe less cumbersome and expensive.

Indeed, Tuesday's announcement provoked a stern reaction from French Finance Minister Bruno Le Maire, whose government has also initiated a new tax on digital giants like Facebook that has angered the United States.