The reaction to Facebook’s announcement of its cryptocurrency was less than positive. From riling politicians to being accused of outright logo theft, the company may be wishing for a mulligan. Though I am generally accused of being a crypto skeptic, it seems I was in good company this week with numerous media outlets voicing concerns with the project. Here are snippets from some of the best.
From Facebook co-founder Chris Hughes for The Financial Times:
“Vital decisions about Libra’s administration, security and underlying assets will be made by the Switzerland-based Libra Association — essentially Facebook and its largely corporate partners.”
“This currency would insert a powerful new corporate layer of monetary control between central banks and individuals. Inevitably, these companies will put their private interests — profits and influence — ahead of public ones.”
Facebook co-founder: Libra coin would shift power into the wrong hands
From Kenneth Rapoza of Forbes:
“From the corporation that has sold out user privacy, Facebook now offers you a bank account without interest rates, insurance, or oversight. There are no term limits on who runs Libra. You can’t vote out Mark Zuckerberg for screwing up monetary policy. How does it make sense for the CEO of a $500 billion company to control a new currency? The concept of Facebook, a large corporation accountable only to shareholders, running a currency is worse than a government.”
Facebook's Libra Coin Is Both 'Vampire Project' And Regulatory Nightmare
From Russell Brandom of the Verge:
“If you don’t trust Facebook to manage the News Feed, why would you trust it to construct a financial system?”
Facebook’s cryptocurrency has a trust problem
From Romain Dillet of Techcrunch:
“Given the current nature of the Libra Association, there’s a chance that Libra becomes a quasi-sovereign currency in Venezuela, Argentina, Turkey or South Africa — but it would be controlled by private companies that don’t care about monetary policies.”
Libra currently looks more like a fiat currency than a cryptocurrency
From Suleman Din of the American Banker:
"But convincing customers to jump ship on their current financial institution may be a tougher sell than Facebook estimates. As much as banking customers like to complain about lousy service on Twitter, uprooting their financial life isn’t a priority for most. Even the unbanked may be wary of Facebook, given data privacy fears and reputational concerns."
Facebook thinks it can displace banks. Good luck with that.
From Gregory Barber of Wired:
“Some US officials had previously expressed concerns about Facebook’s plans. […] The senators asked for details about privacy protections, discussions with regulators, and whether Facebook intended to use its data to market other financial products, such as credit and insurance. As of Wednesday, those questions remained unanswered[.]”
Facebook’s Libra is already hitting turbulence
From Matt Stoller of The New York Times:
“[…] organizing a payments system is a complicated and difficult task, one that requires enormous investment in compliance systems. […] Recreating such a complex system is not a project that an institution with the level of privacy and technical problems like Facebook should be leading.”
Launching a Global Currency Is a Bold, Bad Move for Facebook