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CRYPTOCURRENCY RESOURCE
FACEBOOK MAY HAVE TOO MANY USERS FOR ITS
CRYPTOCURRENCY TO FAIL — EVEN IF YOU DON’T
TRUST IT
By Theodore Schleifer
ibra, Facebook new virtual coin, is the most crypto investors and executives are deeply skeptical
consequential cryptocurrency effort undertaken that a company as rapacious as Facebook could ever
Lin several years. seriously commit itself to the value of decentralization
that’s at the core of the crypto industry.
Facebook cryptocurrency Libra has the potential to
become a way millions of people make payments and But most people I’ve spoken with in recent days
conduct cash transactions online. Facebook doesn’t believe Libra can be successful — largely because of
have much consumer trust. But it does have a hell of a Facebook’s enormous scale. They’ve posited that the
lot of consumers. platform’s unprecedented user base is the only global
population that’s big enough to organize around a
And that’s enough to make Libra, the new virtual coin single currency. In addition, Libra’s initial list of
that Facebook announced the most consequential backers is impressive. Some think it might be an on-
cryptocurrency effort undertaken in several years. ramp to widespread consumer adoption of other
digital currencies like bitcoin.
Cryptocurrencies can be used to digitally pay for goods
and services, like a credit card, and to transfer funds, Wish Facebook’s new cryptocurrency well or wish it ill,
like Venmo. So far, most people haven’t adopted them nearly everyone in the crypto and tech industry is
as a common form of payment. The most well-known watching with bated breath.
virtual coin, bitcoin, has instead functioned more like
an investment asset. But Libra has the potential to What is Libra?
become a way millions of people make payments and
conduct cash transactions online. Here’s how it will work: The outside group Facebook
has partnered with, which is based in Geneva and
Facebook is creating a new outside foundation to called the Libra Foundation, has so far recruited 28
support Libra, a coin that the company is hoping will partners to serve as “nodes” on their blockchain and
trade among its 2 billion users around the world and govern the digital currency. They’re aiming to have
with Facebook’s 28 partner organizations that are 100 different partners by the time Libra launches next
preparing to accept the currency in 2020. year, each with equal power.
It is the most aggressive step taken yet by any of the US Partners, who reportedly are investing $10 million
tech giants toward blockchain technology. It also each, include merchants where consumers would be
represents a strategic gamble by Facebook that able to use the Libra currency — such as Uber, Spotify,
enough people will trust a scandal-plagued and data- PayPal, and, crucially, Visa and Mastercard. The Libra
hungry company with their personal finances. Foundation will use the $1 billion total it intends to
collect from 100 partners to help to manage the
reserve of digital currency and to keep its price
“I believe it should be as easy to send money to relatively stable, a problem that has bedeviled
someone as it is to send a photo,” Facebook CEO Mark widespread consumer adoption of cryptocurrencies
Zuckerberg said earlier this year at the company’s like Bitcoin, whose constant price changes makes
annual developer conference. Those who are skeptical transactions unwieldy.
about Libra’s potential point to Facebook’s approach
to data collection and its well-known privacy missteps, One of the 28 partners so far is a new product called
which are particularly troublesome in a crypto Calibra, which Facebook will operate. Calibra will
industry that prizes “decentralized” power. Some serve as a digital wallet that allows people to send
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