Facebook Libra: There are concerns

With "Libra" Facebook wants to introduce its own online currency. In this article we explain how it works and what reservations there are against it.

What differentiates Libra from Bitcoin

Blockchain technology is used for all major cryptocurrencies. However, Libra differs fundamentally from Bitcoin & Co in a few points:

• With the established online currencies, you can make money yourself by providing computing power. This is not intended for Libra. Facebook and its partners in the "Libra Association" take care of the complex calculations.
• As a worldwide means of payment, Libra is designed for fast and uncomplicated transactions. In countries with a lower infrastructure in particular, technical hurdles are to be reduced and access to online trading simplified.
• As a user, an electronic wallet is available on the "Calibra" platform, through which you can exchange, send and receive money. In the long term, Facebook is also thinking about Libra ATMs in cities.
• Customers do not have to reckon with large fluctuations in value. The value of Libra is linked to real currencies and is covered by the currency reserves of the companies involved.

Facebook currency concerns

"Libra" means the Libra zodiac sign. However, economists and politicians fear that many things could go wrong with the project. For the time being, investors are also keeping their distance.

• In recent years, Facebook has repeatedly been the focus of serious data protection scandals. That this company of all people should now also manage sensitive bank data of billions of people seems at least questionable.
• The online market leaders Spotify, Paypal, eBay and Uber are also involved in the "Libra Association". To gather all of these already billion-dollar corporations under one roof is an extremely questionable bundle of power for economists.
• Not only the competition would have to suffer from the growing influence. Libra's feedback to the global financial market also works in the other direction. In the worst case, this connection could plunge entire countries into a currency crisis.
• The finance ministers of the G7 countries have therefore kept an eye on the project and want to put the "Libra Association" under bank supervision if necessary. So when, where and in what form Libra will be available is still unclear.