Published in El Pais, July 3rd 2019.
Last week I wrote about the stablecoin that Facebook was expecting to announce. Now that the announcement has been made and it has an official name (Libra) I thought I would comment on some of the features that have been confirmed rather than just on speculation.
- Stablecoin: As mentioned before, a stablecoin is often pegged to fiat currencies like the U.S dollar, meaning the value should remain the same if it is managed properly. To assure this all money used to purchase the libra coin will be deposited in a reserve and coins will be minted or burned by the non-profit organization created to oversee Libra’s blockchain. This feature will likely attract many who point to Bitcoin’s volatility as a reason they do not trust cryptocurrency though many likely will be skeptical that such a thing is even possible.
- Privacy: Facebook claims that information from purchases on the blockchain will be kept separate from social media information. This would be good news to some as Facebook has been under fire for the past few months for misusing information. However, the value of the data being collected could be worth millions of dollars and many would wonder if Facebook would not be tempted to break their promise.
- Real world application: Many countries in the world have an easier access to Facebook then they do to banking services. The Libra could takeover as the de facto bank for many of these people as they will start to pay for real services using this coin. Since it will be backed by both the U.S dollar and the Euro, the Libra may be a safer option then their own currency that may be prone to hyperinflation.
- Major partnerships: This coin has something that no other digital coin can claim, backing of major partnerships. Companies such as PayPal and Uber are already getting behind it. This could help legitimize it early and help speed up adoption.
The features of this coin can certainly be interesting. The only down side so far is that it will be some time before the coin is ready to be used. At the risk of sounding impatient I am really looking forward to seeing this coin in action as only time will tell if this stablecoin will begin a new cryptocurrency revolution.