Facebook co-founder bashes company's cryptocurrency plans, calls them 'frightening'
Just a few days back, Facebook announced Libra, a cryptocurrency based on a blockchain-based network called Calibra. The digital coin came as a major step from Facebook in the global payments category, but the company's co-founder, Chris Hughes, has raised some serious alarms over the move. He claims that the company's crypto plans are 'frightening'. Here's more on his remarks.
Hughes says Libra will make Facebook more powerful
After calling for a break-up of Facebook earlier this year to keep it from becoming a monopoly, Hughes has again expressed concerns over the power going into the hands of the company with Libra. In an op-ed published in the Financial Times, he emphasized that the decentralized nature of Libra will make Facebook and the members of the association controlling the cryptocurrency more powerful.
Concern over power shifting from global world banks
"What Libra backers are calling 'decentralization' is in truth a shift of power from developing world central banks toward multinational corporations and the US Federal Reserve and the European Central Bank," Hughes wrote in the FT story.
They could make or break companies
Hughes claimed that Facebook and the Libra Association (backers of the cryptocurrency) will be deciding which banks, companies, and payment processors they would work with. This, he said, would make or break "companies in some markets overnight and "entrench existing players rather than creating a truly decentralized system." The Libra Association currently has 28 members including Visa, MasterCard, Facebook, PayPal, Spotify, Uber, and Vodafone.
Threat to emerging economies
Hughes further added that "if enough people trade out of their local currencies" for Libra, it could destabilize emerging economies in the long run. This, he warned "could threaten the ability of emerging market governments to control their monetary supply, the local means of exchange, and, in some cases, their ability to impose capital controls." Libra will launch in the first half of 2020.
How Libra would work
Libra will be just like any other digital currency; you'll buy some coins with real money and store it in a digital wallet. Facebook's digital wallet is named Calibra and it will be integrated into Facebook Messenger, WhatsApp, and other approved third-party wallets. Hence, by simply using your phone, you will be able to send Libra to friends or make payments for online/offline services.