Is Facebook’s Libra a threat potential threat to Bitcoin
Facebook has jumped to the bandwagon of cryptocurrencies, by announcing its owns digital currency Libra. But, the big question is, Is Libra a threat to Bitcoin or other cryptocurrencies? This is the question which the cryptocurrency market is asking, and we try to find probable answers to this question. Libra can’t be a threat to traditional cryptocurrencies, for two simple reasons:
➢ Libra is not decentralized.
➢ Libra is not permissionless.
It is not that Facebook is not aware of these two reasons. It is definitely aware, and as a result, it has already taken the initiative. As part of this initiative:
➢ Facebook has engaged multiple organizations which will govern as well act as validators once the currency is launched. However, instead of decentralization, it will actually make Libra as a centralized virtual currency, as everything will be decided by the consortium which Facebook will form for governing Libra.
➢ Regarding being permissionless, Facebook has mentioned that this is something which they are looking to address during the transition phase, which might be in the next five years.
Even though Facebook has come up with the clarifications, but it generally fails to address the mentioned issues. However, Facebook clarifies that Libra is meant for those customers who don’t have access to traditional financial services, but at the same time, they have never used the cryptocurrency services.
It is very clear that Facebook is aiming to a market that is devoid of cryptocurrencies. As a result, it is not a threat to the conventional cryptocurrencies but to the fiat currencies.