The currency and transactions will be managed by the Libra Association, a membership organization founded by Facebook's subsidiary Calibra and 27 other large international corporations such as Uber and Vodafone, MasterCard and Visa.
According to Rich Tehrani, a futurist and corporate advisor on cybersecurity in the US, this “gives confidence that the currency will be isolated from the social network but it remains to be seen how closely it will be tied to various Facebook platforms.”
Facebook says that the Libra will be protected from rate fluctuations by being strictly bound to several hard world currencies at once. “It will be backed by a collection of low-volatility assets, such as bank deposits and short-term government securities in currencies from stable and reputable central banks. In theory, this makes good sense- but the devil is in the details as they say. If there are dramatic market fluctuations or currency collapses, we will have to see what happens to Libra. It is possible global turmoil will actually strengthen this cryptocurrency, as it will be based on a diversified basket of assets,” Tehrani noted.
Munzir Ahmad, a New Delhi tech journalist and Founder of Sky Televentures said that Libra's stability is an issue: “No cryptocurrency can be stable at all [...] look at Bitcoin, it was just like a bubble in India. Bitcoin came like a breeze and now in India, no one cares about Bitcoin. I know many who invested millions in Bitcoin, and now they regret it. After all, Libra is also a cryptocurrency and it's not immune.”
Facebook assures that in the case of hacking, Calibra will refund the lost coins, but the “risk is high. Fraud will happen,” Ahmad stressed. While Tehrani noted that cryptocurrency can be hacked.
“If there is one certainty, it is hackers will always find a way to hack. There is always a cat and mouse game happening with fraudsters. Since Libra is based on the blockchain, it should be relatively secure, but one worries about the APIs and wallets – these have been areas of weakness for other currencies. This is where I would watch most closely,” the cybersecurity advisor explained.
At the same time, personal data protection is in question, given Facebook's track record of privacy violations and its involvement in the Cambridge Analytica data scandal.
“After the Cambridge Analytica data scandal it's not all that easy to trust Facebook,” Munzir Ahmad says. “But still Facebook clearly said that aside from limited cases, Calibra will not share information or financial data with Facebook or any third party without customer consent. But when we talk about developing nations like India, where most of the Facebook users never read the terms and conditions, they don't bother about user consent and just tap YES.
In my opinion, personal data can never be kept safe on the internet. No matter what,” Munzir Ahmad noted. Time will tell whether Libra will make financial transactions safe and secure. But with 2,4 billion Facebook users, it has the potential to become one of the world’s biggest financial entities.
The views expressed in this article are those of the speaker and do not necessarily reflect those of Sputnik.
The views and opinions expressed in the article do not necessarily reflect those of Sputnik.