Popular social media network and tech giant, Facebook, unveiled its most ambitious venture yet two days ago: The Libra cryptocurrency. However, following an initial market excitement, it seems that the project, even if it’s still has a long way before it can be officially rolled out, has already faced tremendous skepticisms across sectors.
Libra, as Facebook said, is a secured currency; unlike Bitcoin. The new digital money banks on real currencies and government certificates. It also runs on its blockchain technology, the Libra Blockchain, which assures the protection of every transaction involving the new online coin.
Furthermore, as part of Facebook’s assurance that Libra is unlike any other, albeit volatile cryptocurrency already roaming around the internet, the California-based company also announced that the coin would be overseen by an organization it spearheads — The Libra Association. Members of the new organization backing up the new cryptocurrency include payment and financial service providers, among others, like PayPal, Mastercard, and VISA. But of course, Facebook is the face of the organizations.
While Facebook will not have direct control of the Libra currency, the tech company is planning to profit from it by launching a subsidiary, Calibra, which serves as a crypto exchange company for Libra. Calibra is also a digital wallet, where users can store their Facebook coins and process transactions like transferring funds and sending remittances.
Facebook’s security reputation
But security isn’t something Facebook can display around as its badge of honor. The social media platform has been involved in controversies after controversies related to the security that they provide to their users.
One of the biggest blunders faced by Facebook that summoned CEO Mark Zuckerberg in Congress was the allegations that the company allowed U.K.-based firm Cambridge Analytica to use Facebook user data in attempts to sway public opinion in the 2016 elections. According to reports, Cambridge-Analytica improperly accessed 87 million Facebook users’ data. Following the highly-covered Congress testimony, Zuckerberg has promised to fix its security problems and to make sure that the same incident will not happen.
But it is not the end of Facebook’s security mishaps. Only recently, Facebook was involved in another data breach, where the company has admitted that it has been saving user passwords in human-readable format, and allowed those passwords to be exposed to thousands of Facebook employees. While Facebook defended the incident by saying that its employees did not use the exposed data in any way, multiple sectors have still slammed Facebook over the apparent recklessness of the company that leads to the exposure of thousands of user passwords.
The intense pressure on Facebook to secure user data may affect how Libra will perform in the market once the tech giant starts to roll it out early next year. As early as now, skepticism looms over Libra’s head as experts believed that it could be a venture, just many of other investments from Facebook, that users refuse to adopt.
Data shows users don’t trust Facebook in handling their money
And the numbers are glaring. In a study, most Facebook users (91%) said that they would not use the payment feature on Facebook Messenger. In 2015, Facebook rolled a payment option that can be done through its messaging app by connecting the U.S. issued credit and debit card as well as other payment merchants like Paypal. According to research firm Statista, around 79% of Facebook users who are aware of the feature did not use the payment option in Facebook Messenger.
In a greater scheme, consumer attitude towards online payments has also gone sour. Among those who currently access their bank and financial accounts online, about a quarter of people said they’re considering no longer doing so with mobile apps or via the internet, the MagnifyMoney survey added.
“This is largely because many U.S. consumers are more comfortable paying with either a credit card or cash instead of their mobile device,” the company added. “Additionally, the technology shift at the point-of-sale on the merchant side has been slow.” eMarketer expects that percentage to climb gradually.
Governments are skeptical too
The growing skepticism amongst users isn’t the only problem faced by Facebook’s Libra. Lawmakers also have their eyes on the recent project of Facebook. US Representative Maxine Waters, chair of the House Financial Services Committee, asked Facebook to halt work on the unit it answers questions about privacy and security.
European officials have also expressed concern regarding Libra, citing that the system, if widely adopted, could shake the global economy and rival national banks. French Finance Minister Bruno Le Maire sent a letter to officials from the G7 and International Monetary Fund calling for a group to examine Libra’s impact on the global financial system. Le Maire said that Libra must not become a “sovereign currency,” while a German politician noted Facebook’s potential to become a “shadow bank” to the global financial system.
Nonetheless, the lawmakers come forward with the acknowledgment that they are yet to understand the dynamics of Libra and what it means for the global economy. But whether or not Facebook can convince governments of the benefits of having a digital currency is worth watching out for.