Can we trust Libra, Facebook's new currency?
June 20, 2019
Would you trust one of the world’s least trusted companies with your money?
It’s a question social media users (and humans globally) need to ask ourselves as Facebook moves forward in creating Libra, the cryptocurrency it announced this month. (The current will be managed by Calibra, an entity under the Facebook organization umbrella.)
Our first question: why would a tech platform decide to create an alternative crypto-currency?
Calibra’s rationale is that moving money around is essentially just data sharing—its parent company’s entire raison d'être. In their whitepaper on the subject, they say they’re well-equipped to solve the problem that 1.7 billion adults across the world have: no access to traditional financial and banking systems. The social media giant seeks to offer options for those traditionally left out of the financial system.
In its whitepaper, which provides details around what makes Libra superior to Bitcoin, the company lists items from Calibra’s belief system, which informed the creation of Libra. One notable standout:
We believe that people will increasingly trust decentralized forms of governance.
That statement may well be true. But when users specifically can’t trust in Facebook’s ability to protect the data—something the company has given us plenty of reasons not to trust in—how, and why, should we trust them with our money?
In its whitepaper, Calibra tries to address this glaring issue. The Libra Association, the governing body of Libra, was created in an attempt to keep intact the perception of Libra as a neutral, trustworthy fiscal option. Regular people don’t sit on the Libra Association, though some nonprofits will. But the majority of slots will be given to for-profit entities like Uber and Visa, with these companies’ combined userships totaling in the billions.
That means that, if Libra becomes commonplace, billions of people could have new access to financial systems—a positive change in their lives. But it also means Calibra and its parent company will have an unprecedented amount of power of the global financial system. And, given Facebook’s shaky history with regulating itself and its users, we shouldn’t be heartened by that notion.