Bitcoin Facebook’s announcement that in the coming months it will launch its own currency, called the pound, aroused concern among economists, authorities, and central banks in many parts of the world.
The US Congress, without going any further, has been genuinely concerned about the power that Facebook already accumulates in the form of data from its 2.38 billion users around the world.
So much so that the issue is being debated this week in the finance committee of the US House of Representatives.
It remains to be seen that this international payment system devised by the team of Mark Zuckerberg, the founder of the social network, can be stopped in some way.
However, there are questions about how people’s money and data will be protected, as well as about value volatility.
US Treasury Secretary Steven Mnuchin recently expressed “serious concern” about the creation of the pound and pointed to its possible ” speculative ” character and its potential use “for money laundering.”
“Facebook has shown scandal after scandal that does not deserve our trust,” Democratic Senator Sherrod Brown, the top member of the US Senate Banking Committee, said Tuesday.
Brown added that he considers it “delusional” that Facebook thinks people would trust the social network with “hard-earned” money.
Brown’s harsh words came during the Senate Banking Commission’s questioning of David Marcus, the chief executive of the company overseeing the project.
“I don’t trust you,” Republican Sen. Martha McSally told him.
But Marcus, who was PayPal’s chairman from 2012 to 2014, tried to assuage lawmakers’ concern by promising that Facebook won’t start offering pound until regulatory issues are addressed.
“We know we have to take the time to get this right,” Marcus said.
“To earn the trust of the people, we must have the highest standards in privacy,” he added.
David Marcus, the executive in charge of Facebook’s cryptocurrency project, appeared in the US Congress (Photo: Getty Image)
“The issuance of a currency cannot be in the hands of a private company because it is an intrinsic element of the sovereignty of a country,” said German Finance Minister Olaf Scholz.
Scholz refers to the fact that in short, taxes, fines, or any other citizen service are paid in the currency issued by the central bank of each country.
At its launch, Libra was immediately branded a cryptocurrency or cryptocurrency.
A field where, to date, bitcoin reigns, the best known of the currencies born in the heat of blockchain technology, which allows information to be chopped up and its pieces saved on different computers around the world.
Your records are immutable. It is virtually impossible to hack into such bits of information to change or steal them.
“These new instruments could do for payments, the same as the internet did for information: send money safely, instantly and almost free,” explained David Lipton, the acting director of the IMF.
In practice and since Facebook owns WhatsApp, you can send pounds as someone who sends a photo through the chat. The same will happen with Messenger.
But beyond sharing the technology that supports them, the differences between bitcoin and Libra are huge.
These are 3 of the most important differences:
The currency of the technology giant was born under the weight of the law and subject to the rules of regulators.
The 27 founding companies that support Facebook in this adventure (including Visa, Mastercard, Uber, Lyft, PayPal, eBay, Vodafone, and Spotify ) will form the Libra Association.
Only companies under the umbrella of that association will be the only ones that will be able to make transactions with the currency.
There are already more than 100 different brands willing to join the project.
Your transactions will be subject to the same consumer protection and oversight agencies as, for example, US banks.
The digital wallet in which the pounds can be stored will be called Calibra.
Bitcoin, for its part, is not controlled by any individual entity. It is a decentralized currency.
The information on who owns the coin or what it spends on is disseminated on different computers around the world.
Libra data will be in the hands of the Libra Association and Facebook agrees to transfer consumer information to third parties in order to complete transactions.
While the value of bitcoin is determined purely by the supply and demand of its market, the value of the pound will be determined based on whether a basket of assets, made up of country debt or bank deposits, to which it will be referenced rises or falls.
Libra will be backed by real assets since the objective is for it to be a stable currency, without extreme fluctuations in its value.
The volatility of bitcoin is precisely due to the fact that its price rises or falls depending on supply and demand.
The more people interested in having bitcoin, the greater its value. The coin has cost more than $ 17,500 per unit.
But when the market loses interest, bitcoin deflates.
The minimum value this year was marked on January 28 when it reached the US $ 3,453.
Facebook claims this is a global coalition, not Mark Zuckerberg’s new plan to rule the world (Photo: Getty Image)
Bitcoin owners are anonymous.
On the other side, Facebook accounts will be verified.
Those who want to open a Calibra wallet will have to present an official identification, as is done now when opening a bank account.
Being a legal currency, the standards of any currency in the world are applied to it to prevent the financing of terrorism, avoid fraud or money laundering, and tax evasion.
Libra is especially aimed at the 1.7 billion people who do not have a bank account and who have to pay a high cost to transfer money to their relatives.