There has been a bit of distress on social media over the status of the cryptocurrency world the morning after the revealing of the Facebook new coin. Various experts have aired their beliefs on project Libra and how they think it is going to affect cryptocurrencies. Of course, many of them believe that the stablecoin won’t have any effect on the market and won’t near compete with the likes of crypto giants like bitcoin.
Widespread information that has been revealed here has shown that the currency will be backed by fiat currencies to avoid fluctuations in price which cryptocurrencies are notorious for. The stablecoin will also be used for low to no fee payments between Facebook users and sister platforms, including Facebook Messenger and WhatsApp.
Facebook is reported to have already spoken to myriads of financial institutions to form a $1 billion fund and create collateral. The social media giant is also believed to have already talked to a considerable number of merchants to have them accept the Facebook coin as a payment method. The deal is believed to have gone as far as to sign up bonuses for those that have agreed to sign up.
According to an alleged leaked blog, Facebook criticizes existing cryptos on their failures to achieve mass adoption and offering inadequate solutions to transactions and value storage. Sources reveal that the company looks to go as far as creating physical ATMs for its cryptocurrency.
Why Experts Are Rubbing Off The Facebook Coin
But why are experts rubbishing off Libra’s potential to disrupt major cryptocurrencies? We have to find out from the experts themselves.
Speaking at the CryptoCompare Digital Asset Summit Andreas Antonopoulos, the author of ‘Mastering Bitcoin’ points out five pillars or principles to evaluate blockchain. The pillars of an open, public, borderless, neutral, and censorship-resistant blockchain system.
Now, according to Antonopoulos, when you take these pillars into account, you realize that the Facebook coin paints a different picture. The Libra coin, besides being issued by one of the largest companies in the world, does not subscribe to the essential pillars that bitcoin and the rest of cryptocurrencies do.
A Closed, Not-Borderless System
Antonopoulos notes that Libra coin is not open. Everyone has to be identified, vetted, and authorized by the social media giant. You can’t openly join the system; it is closed. Connecting applications and trading by independent markets is impossible.
The new cryptocurrency by Facebook also has to follow regulations besides not being borderless. Specific countries are excluded from its network, and some of its payments across borders will have to be tracked.
Charlie Shrem, a crypto entrepreneur, agrees with Antonopoulos. He sees the project as an attempt by big companies to lure them away from bitcoin.
Facebook Coin A Threat For Banks, Not Cryptocurrencies
Antonopoulos continues and states that Libra has some of the worst characteristics of surveillance capitalism with the inconveniences of seizures, freezing, and bureaucracy popular with the traditional payment system.
He asserted that the project will indeed threaten banks because they start with 2 billion users. As for cryptocurrencies, however, different rules apply.
Antonopoulos ended by asserting that personal freedom wasn’t going to be handed over to users by Facebook. Access to the financial system is not going to be provided by Facebook because it is a system made to include those already in it.