Facebook’s crypto currency system Libra is criticized by U.S. President Donald Trump. The digital currency is not real money, it is very unstable and is largely used to buy criminal goods such as drugs or for illegal activities. Trump also includes other currencies such as Bitcoin in his criticism. “If Facebook and other companies want to become a bank, they should […] abide by banking regulations,” he writes on Twitter.
US Treasurer Jerome Powell is also against Libra – for similar reasons: “Libra raises many concerns about privacy, money laundering, customer protection and financial stability,” he said on the news portal Reuters. Not in response to these comments, but as a justification for the Libra project, Facebook developer David Marcus answered a few questions a week ago. “The current system is designed in such a way that people whose cash balance falls below a certain threshold are charged fees they can’t afford,” he says about the interest rate system for established banking transactions.
Criticism of the Libra blockchain
One goal of crypto currencies is to be more independent of banking systems, which is why they are calculated decentrally on a peer-to-peer basis. Transactions are encapsulated in a blockchain that is as open as possible to the source – for example for third party developers of cryptowallets and for transparency purposes – and should be unchangeable. Facebooks Libra is somewhat different: the social network cooperates with credit institutions such as Visa and Mastercard, which have their roots in traditional banking and are internationally recognised. Some users don’t trust Facebook with a currency. Facebook is not the central administrator of the system, but one of many partners. Marcus writes: “Facebook will only be one of over a hundred members at the start”.
Moreover, the current state of the Libra blockchain does not correspond to the desired open source approach. It is not yet organized decentrally. Marcus also admits this: “It is definitely not as open as Bitcoin, for example, where anyone can participate in the consensus algorithm,” he says. So far only members of the project have been able to participate in the currency. However, Libra is open to developers who write applications for the system.
Facebook has not yet commented on the accusations made by US politicians. For Trump, however, there is only one currency in the USA. He writes on Twitter: “It is by far the most dominant currency in the world, and it will always be so. It’s called the United States Dollar!