When Facebook first publicised its plans to launch a new 'decentralised' digital currency in 2019, Libra, many people were surprised at the news. Few months after Libra's announcement, Facebook released its official whitepaper to the general populace, and eyebrows were raised.
People became more aware of the reality, and imminent debates followed. Many questioned the timing of the launch of Facebook's new cryptocurrency, which was touted to be a global alternative to existing means of making payments.
Since the launch of Bitcoin in 2009, other third-party platforms have risen to fill in necessary gaps that would boost bitcoin's adoption and ease its use.
For Facebook, ever since the announcement of the Libra, it seems as if all hell was let loose. From every corner, it has been one level of scrutiny to the next, from analysts to international organisations. Even the US Congress was not left out of the subtle war on Libra.
Classifying cryptocurrencies has been a heated subject for a long time now, and many experts are not new to such debates. Many believe that Libra ought to fall under the category of securities because of its degree of centralisation. Libra's level of centralisation means that changes can easily be made to it by the owners, which can influence its exchange rate.
There have been several comments that there is no need for Facebook to create a new cryptocurrency when it can just adopt Bitcoin. Citing Cash App, the company integrated Bitcoin into its operation instead of pursuing a new crypto idea.
In October 2019, a caucus member of the US Congress, Warren Davidson, made his thoughts on the digital currency known, and, of course, it was not far from the general opinion. Mark Zuckerberg, the CEO of Facebook, had previously appeared the before Congress to talk about his Libra Project but ended up raising more questions than calming nerves.
During an interview with the co-hosts of Noded Bitcoin Podcast last year, Michael Goldstein and Pierre Rochard, Congressman Warren Davidson appeared to be unimpressed about Libra, and he even labelled it "shitcoin", when talks veered towards Facebook's cryptocurrency. Regarding Bitcoin, all he had for it was praises, even reminiscing on his first encounter with the pioneer cryptocurrency back in 2013.
To bolster his point, Davidson mentioned a strategy being used by Libra and that is presenting the stablecoin as decentralised digital money just like Bitcoin. Meanwhile, Libra will be owned by the entity called Facebook. He also recalled the popular privacy issue which has plagued Facebook for a long time now. He asked if people would be comfortable with their transactions being tampered with.
With each passing day, the world waits earnestly to see what the Libra digital asset will become. Despite its many challenges, Facebook's cryptocurrency remains a hot topic of discussion. Fears linger about what Libra would mean for the crypto community, whether it will be a facilitator or a death bringer.
The coming of Libra has exposed the flaws of traditional cryptocurrencies even more. The electricity consumption of Libra will be far less compared to Bitcoin. Its transactions per second will be in the environment of 1,000, a feat Ethereum and Bitcoin that have 15 and 7 TPS, respectively, can only wish for.
Owners of Libra will be able to send money globally at a cheaper rate and faster too. Additionally, Libra will finally pave the way for the over 1.7 billion unbanked to gain access to the global financial system.
The Libra digital asset is expected to have something other cryptocurrencies do not possess, and that is being pegged to lots of global currencies. Automatically, this will make it a more stable digital currency compared to others.
Bitcoin has had the challenge of mainstream adoption because of its high volatility. This will Facebook's digital asset address, alongside issues like loss of value and use for illegal activities. Thereby easing the minds of merchants who stay away from cryptocurrencies due to their lack of trust for them, which stems from issues like these.
Bitcoin's style of conducting transactions is slow. Before a transaction can be approved, six miners must confirm it first. Its scalability is yet another issue hampering its mainstream adoption.
Bitcoin transactions take at least 10 minutes to be confirmed, a length of time even payment processors like PayPal, Visa and MasterCard can beat, as there is almost instant.
Since a good number of payment processors are in partnership with Libra, the digital asset may finally be able to surmount the scalability issues Bitcoin has been unable to overcome.
With the alliance's Facebook's cryptocurrency is fostering, the potential of Libra relegating other digital assets to the background cannot be denied. But at the same time, its impending success can be a boost to the crypto community as well.
This will help other cryptocurrencies break the barrier keeping them from going mainstream. Whatever be the prediction, one thing is sure that the future holds a lot of promise.