There seems to be no shortage of opinions when it comes to Facebook’s Libra cryptocurrency. While some voices believe that Libra (trustless or not) is a good thing for facilitating cross-border payments, others are not so sure.
Many believe that a lack of trust in the giant social media corporation will be the biggest stumbling block to its release. But regulators, central banks, and governments aside, what’s the overall cryptocurrency market sentiment towards the project?
The Libra cryptocurrency is being criticised globally
There’s been a good amount of backlash and scepticism towards Mark Zuckerberg’s proposed virtual coin. As recently as Monday of this week, the European Central Bank’s legal official Yves Mersch poured further criticism on the Libra cryptocurrency, calling it “beguiling but treacherous”.
Moreover, French central bank governor Francois Villeroy de Galhau has expressed concern over how Libra will manage its AML requirements and protect consumer data.
US President Donald Trump has been equally scathing in his attacks on Libra, stating that there is “only one real currency in the USA, and it is stronger than ever, both dependable and reliable”. He also tweeted that if Facebook wanted to become a bank, it must “become subject to all Banking Regulations”.
….Similarly, Facebook Libra’s “virtual currency” will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks, both National…
— Donald J. Trump (@realDonaldTrump) July 12, 2019
We know that regulators and central banks around the world are far from receiving Libra with open arms. But, as the antithesis of a peer-to-peer transfer or store of value that requires no centralised authorities or capital controls, how does the cryptocurrency community feel about its impact?
When the white paper came out initially, cryptocurrency advocate and Wyoming Blockchain Taskforce member Caitlin Long weighed up the pros and cons. She started out by saying that it was clear that “Facebook completely misunderstands money” but that Libra was “a helpful detour that advances the crypto cause” and widens the conversation.
5/ …THANK YOU @facebook for widening the conversation about what money really is. That is a true service to society. #Libra is the first denationalized "money" (I'll always use quotations when referring to it as such) that billions of people in the world will encounter…
— Caitlin Long 🔑 (@CaitlinLong_) June 18, 2019
Cryptocurrency market sentiment towards Libra
A report released by intelligence agency Cindicator yesterday claims to be the first evaluation of cryptocurrency market sentiment towards Libra. The 18-page report, entitled “Libra: the race for a global currency is on, uncertainty is high”, dives into the characteristics of the proposed virtual coin as well as its technical capabilities and limitations, competitors in the crypto space, and overall market impact.
The findings were unsurprisingly mixed. Crypto analysts are split down the middle when it comes to the Libra cryptocurrency. Some 45% said that they planned to use Libra while 48% stated that they would avoid it completely. Among the most common reasons for sidestepping Zuckerberg’s creation are a lack of trust in Facebook (29%), the cryptocurrency’s inherently centralised nature (31%), and concerns over data privacy (11%).
Those in favour of Facebook’s currency believe that Libra will be the catalyst to mass adoption of cryptocurrencies in general. This, they argue, can only be a good thing for the industry at large.
Interestingly, while many remain distrustful of the social media company’s motives and the possible negative outcomes, more than 75% of respondents believe that it’s just a matter of time before another major player announces its own cryptocurrency. Some 22% believe it will be Amazon, while 14% cited Google, 10% Apple, and 8.5% Walmart.
Co-founder and CTO of Cindicator, Yuri Lobyntsev, said:
“We see that trust is the biggest issue for Libra. I think Mark Zuckerberg will get flak from everybody, including regulators and investors. He’d have to go through fire and water to keep control over his position at Facebook. If he withstands this heat and secures Libra on idealistic principles, this will be a revolution and the largest monopoly on the planet.”
Is Libra a competitor to Bitcoin?
Whether or not Libra is a competitor to Bitcoin depends on your point of view and which use cases you look at. Fundamentally, Libra is a payment system while Bitcoin has established itself as a store of value. Libra is monitored by centralised institutions whereas Bitcoin runs on a decentralised protocol. The two are different at the very core.
However, if you consider cases such as Argentina or Venezuela, it’s certainly possible that the Libra cryptocurrency will eat into Bitcoin’s market share in these regions simply for ease of use and established brand recognition. However, those analysts bullish on Libra believe that it will be the gateway to crypto for large audiences that have never used (or even heard of) it before.
Moreover, while Libra will be pegged to a basket of global fiat currencies and has an almost ETF-like structure, it certainly doesn’t present the same opportunities for investment as other cryptocurrencies like Bitcoin.
According to the Cindicator report, Libra’s biggest competitors are more likely to be Telegram’s mysterious TON, Binance’s Venus, TAP on MakerDAO, and even China’s central bank digital currency, as well as other potential new entrants.
Facebook’s cryptocurrency could potentially help a lot of people around the world and bring new eyes to cryptocurrencies in general. However, there are few people jumping up and down on the sidelines awaiting its arrival.
The cryptocurrency industry, just like the wider outside world, is undecided and divided, and it seems that Zuckerberg will have to do a whole lot more before Libra is accepted and welcomed.