Even in the volatile world of tech, there aren’t many innovations which have proved to be as controversial as cryptocurrency. Starting with Bitcoin’s mysterious origins, the landscape of digital currencies has been affected by allegations of use on the dark web, near-fatal collapses, widespread hacking and an unprecedented lack of regulation.
Whilst the record-breaking highs have added peaks throughout the journey, there’s no denying that cryptocurrencies have had a rocky road thus far. As the main players clamour to get on board the juggernaut, it seems the precarious journey of cryptocurrencies is only just beginning.
Will Facebook’s Libra bring cryptocurrency into the mainstream?
Although the use of digital currencies has become much more widespread in recent years, Facebook’s reach could see the use of cryptocurrencies skyrocket. Potentially adding legitimacy for the millions of users who are currently too hesitant to venture into the world of digital currency, it’s likely that a Facebook-backed cryptocurrency would see a significant uptake in the number of people using crypto.
Known as Libra, the proposed Facebook digital currency was hailed as the Next Big Thing. Announced earlier this year, support from major players in the financial industry seemed to indicate that change was coming. However, recent reports suggest that Libra will face an uphill battle even to get off the ground.
As a result, The Libra Association, responsible for building the digital currency, is rapidly losing high-profile members. PayPal, Visa, eBay and Mastercard have all withdrawn from the project, with others expected to follow suit. Whilst Facebook has yet to admit defeat, it’s left many people wondering whether Libra will progress past the development stage.
Why is the future of Libra in jeopardy?
To date, Facebook has put a positive spin on the departure of its crypto partners and is forging ahead with development plans for Libra…publicly, at least. What’s going in inside the walls of FB HQ is another matter entirely.
The main barrier to the advent of Libra appears to be the widespread concerns over-regulation and the potential for hacking, fraud and money laundering. Although cryptocurrencies have afforded people the opportunity to trade anonymously, the flip side of this is a murky world of dubious transactions and duplicitous vendors.
If a decentralized currency, such as Facebook’s Libra, were to make it big, the impact on the global economy would be unprecedented. French finance minister, Bruno Le Maire, has even gone as far as claiming Libra constitutes a threat to national sovereignty.
So, why is there so much consternation over the development of Libra? Surely the flexibility, immediacy and low costs associated with cryptocurrencies offer something that’s been sorely missing from the financial landscape as we know it? Maybe. Maybe not.
In most countries, currency moderators, banks and financial institutions are backed by the government. If they were to collapse, agreements are already in place to bail the organisation out. As such, investors, savers and account holders have peace of mind that their funds are secure.
With digital currencies, this backup is lost completely. Whilst people may not have much faith in their governments, the relatively limited burden felt by private companies in comparison doesn’t do much to assuage concerns.
Furthermore, the collection, collation and management of personally identifiable information (PII) and financial data raise considerable privacy concerns. With the outfall over Cambridge Analytica still fresh, Zuckerberg will have a hard time persuading people he can be trusted with data of this kind.
What’s the future of cryptocurrencies?
There’s no doubt that cryptocurrencies will continue to flourish but maybe not in the way Facebook hopes. With a major tech giant announcing the development of its very own cryptocurrency, politicians and financial institutions have been spurred into action.
Determined to regulate the budding cryptocurrency industry before it becomes more mainstream, any major player who decides to develop their own digital currency is likely to face endless obstacles.
Although many people believe the latest departures from the Libra Association have been the final nail in the coffin for Facebook’s cryptocurrency, the plans haven’t been officially shelved just yet. As Facebook maintain that they welcome regulation, it seems they’re unwilling to give up the fight for global financial domination.
Whether they’ll succeed, however, is another matter. Although the tech industry has evolved at a far greater speed than any regulatory bodies have been able to keep up with, and unregulated, mainstream digital currency will be a step too far for the powers that be.
As we wait with bated breath to see where this next development takes us, it seems the only sure thing is the rocky road we’ll be travelling on.
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