Libra is a Facebook-created cryptocurrency. The Libra cryptocurrency is designed to function as a low-cost global currency. It will effectively be digital money on your phone that can be used to pay for anything that accepts cryptocurrency. It is a basket of assets, including major currencies and government debt instruments that backs Libra. Libra’s concept is that sending money should be as simple and secure as sending a text message. Libra will be a worldwide payment system supported by a cash reserve and highly liquid assets.
Facebook, which is already embroiled in scandals over privacy and how it collects and utilizes data from its millions of users, has encountered blowback on Libra, a cryptocurrency it planned to introduce in 2020. PayPal, one of Libra’s supporters, pulled out of the alliance on Friday, in what is being described as a big blow for the Menlo Park, California-based company.
REGULATION PROBLEM: France and Germany have condemned the cryptocurrency, citing banking sector dangers, putting Libra’s approval in Europe in doubt. Consumers, financial stability, and even European governments’ “monetary sovereignty” are all threatened by digital currencies, according to finance ministers from both countries last month.
The European Central Bank also stated that it intends to introduce a public virtual currency that would give LIBRA a major hit.
Facebook Inc. CEO Mark Zuckerberg said that the company’s proposed digital currency Libra was a “risky project,” but reassured wary US senators that it might cut the cost of electronic payments and allow more people access to the global financial system.
VERY UNCERTAIN: The partners will each donate $10 million to assist fund the network’s launch. However, in late June, the New York Times’ Nathanial Popper stated that “no money has changed hands thus far,” and that some of the corporations that agreed to give their names to the project avoided making strong public remarks in support of it.
POLITICAL CONTROVERSY: Recently Libra has been in a very dicey condition to promote its cryptocurrency as the whole situation has dipped into a lot of societal angles and anguishes. Given the range of political controversies that continue to plague his company, the Facebook CEO indicated in prepared remarks that his company was eager to take over leadership of the project to an organization of its partners.
TRUST FACTOR: The first is the question of trust with the currency’s issuer. Considering recent controversies, people’s trust in Facebook has plummeted. People are said to trust bitcoin more than Libra. This trust gap seriously jeopardizes Facebook’s network advantage, which it derives from its vast user base. Facebook has stated that it will not proceed with the strategy unless it receives regulatory permission in both Europe and the United States. Regulators and politicians from all over the world have slammed the plans since they were disclosed. Officials are not that confident on that call.
Facebook has said it will not go ahead with the scheme until it secures the necessary regulatory approvals in both Europe and the US. Since it was announced, the plans have been criticized by regulators and politicians around the world. Officials have expressed concern that the currency could be used by criminals to launder money, put customers’ privacy at risk, and even undermine the global dominance of the dollar.
LEGALITIES: The legal ramifications stemming from the possibility of it being misappropriated by criminals engaged in illegal activities or tax evaders looking for a way to move money across borders—although Libra will not be alone in this regard, as crypto-currencies have already been used to support illegal activities such as cyber-crime and the drug trade. This is a big risk and also raises questions concerning the security of the money.
Libra has the potential to become a prominent cryptocurrency all over the world. Facebook has decided to back Libra with assets to combat the volatile nature of cryptocurrencies. However, because of the project’s scope, several concerns have arisen that Facebook must address. Legal, technological, trust and regulatory issues are among them. Facebook’s success in dealing with these issues