Ripple CEO: Facebook’s Libra does not represent all crypto

Goodbye Bitcoin, hello Libra: the scoop on ’s new cryptocurrency | IE HST Rewire Magazine @ieHumanSciTech

Ripple CEO: Facebook’s Libra does not represent all crypto

When Mark Zuckerberg created , it was a way to connect with friends and loved ones. Now, the social media platform has its fingers in a lot of pies: the buying and selling of goods, instant messaging and calling, online gaming, event planning, data analytics for business growth… And now, a brand new cryptocurrency.

The new cryptocurrency, called Libra, will be made available in late 2020 and promises to be a cheaper, faster way to send and receive money globally. It specifically aims to help the estimated 1.7 billion people around the world who don’t have access to a traditional bank.

Here’s the lowdown on what just might become the hottest cryptocurrency of the year.

What’s Libra’s competition?

As you’ve probably heard, the former frontrunner in the crypto game, Bitcoin, has died. It crashed in early 2019, much to the despair of the thousands of hopefuls who rushed to invest in it in 2017 and 2018. But this doesn’t mean Bitcoin couldn’t make a comeback. In fact, it’s still a frontrunner in the crypto game, alongside Ethereum, Ripple, EOS, and Stellar.

How secure is it?

The question on everyone’s lips, indeed. Experts (and non-experts) are understandably hesitant to trust a currency backed by , after the network lost the faith of the masses by misusing their data time and time again. But Libra isn’t centralized—that is, run by any one company, government, or organization. If were the sole entity in charge of the currency, no one would use it.

However, it isn’t fully decentralized, either. knows better than to use the same model as Bitcoin, which is fully decentralized, because it made the currency volatile and hard to use, leading to its ultimate demise. It was also inevitable that the richest Bitcoin owners would form an oligarchy, controlling the market’s every move.

So where does Libra fall? The new cryptocurrency’s official white paper claims it’s both centralized and decentralized. It’s somewhat decentralized because it has no governing body and is blockchain, and it’s somewhat centralized because the Libra Association, based in Switzerland, will oversee operations to ensure no oligarchy arises.

It’s yet to be seen whether this configuration is secure in the long term.

One reassuring aspect of the new cryptocurrency, though, is that it works on a reserve. This means that, un with Bitcoin, you can cash your digital currency in for physical cash even if no one wants to buy your currency from you. 

Whatever the case, the company’s CEO is fully aware of the public’s doubts, and has promised to work alongside US regulators to guarantee its security before its official launch later this year. 

What happens to your Libra when you die? 

Glad you asked. Cryptocurrencies—Libra included—are nigh-on impossible to leave to your loved ones in a will. This is for two main reasons: a) they would need access to your digital coin wallet, and b) they would need to understand how the currency works in order to cash it in for a physical money.

This poses a major problem for the crypto rich (dibs on that term for my rapper name).

An infamous example of the ephemerality of blockchain cash is the case of former Quadriga CEO Gerald Cotten, who suddenly dropped dead in India while on holiday and left behind hundreds of millions of dollars in bitcoin and other digital currencies. The money didn’t get inherited—it disappeared into the void.

A rising response to this conundrum are crypto wills, which determine what will happen to your digital currency when you pass away and consequently generate keys for your lucky next of kin.

These wills are decidedly separate from your standard will, though, as thetransfer and handling of crypto requires expertise that a normal lawyer simply doesn’t have.

As these startups become more popular and the kinks get smoothed out, the amount of crypto disappearing into the ether will drop considerably.

So, what’s the verdict?

World leaders, regulators, and experts have expressed their doubts about the new cryptocurrency, but with backing from big names , Uber, PayPal, Mastercard, Visa, and Spotify, it’s bound to make a splash regardless. And it’s always a good sign that the organization is open to critique and debate before diving in.

One thing’s for sure, though: we won’t be quick to throw money at anything with Zuckerberg’s name on it without asking questions first.

Hailing from Indianapolis, Indiana, Meagan Gardner has been working in content creation and editing for the past four years. She now proudly serves as Rewire Mag’s Editor-in-Chief, and works hard to ensure its content inspires current and future HST students to drive change in the new world of work. Link up with her here.


’s Libra Cryptocurrency Could Be Great, if Not for | by Owen Williams

Ripple CEO: Facebook’s Libra does not represent all crypto

Jun 20, 2019·8 min read


has been trying to “fix” how we send and receive money for years through products Credits and “Send Money to Friends in Messenger.” Enter Libra, an upcoming cryptocurrency that has a couple of modest goals: “Reinvent money. Transform the economy.”

Though you may be unaware, has been working toward this project for a long time. Earlier attempts at creating a new financial infrastructure, Credits, focused on monetizing apps and services that were built on the platform.

At the time, you could buy Credits, which would then allow you to make purchases in games FarmVille, for example. Think of it an in-app currency for the social network and its various appendages — more gold in Candy Crush than actual money.

Ultimately, it failed, in part because there wasn’t a broader use case.

But the idea maintains an appeal. Getting developers to use a “currency” would grant the company access to the valuable credit card details of millions of users buying virtual products — as well as a valuable cut of the transactions made using its tools.

Libra is the evolution of that early goal, now with grander ambitions. wants to completely reshape how people make online payments. By detaching from currencies the U.S. dollar, Libra could bring instant, low-cost digital payments and transfers to anyone with a phone.

On paper, this is the ubiquitous, global cryptocurrency that fans of the technology have dreamed of since the dawn of Bitcoin. Thanks to , the year of cryptocurrencies going mainstream may finally arrive.

But this is , so as you can imagine, there are some issues here.

First: Why Libra matters

Bitcoin, cryptocurrency, and blockchain are now a part of the modern vocabulary, but they’ve really yet to demonstrate vast consumer appeal.

Few people are paying for their coffee with a Bitcoin-backed card or sending money to relatives on the blockchain, because it’s all too complex.

(The staggering amount of electricity needed to manage Bitcoin doesn’t help.) But has amazing reach — last reported to be more than 2.

3 billion active users — so Libra is almost certainly set up for overnight success where every digital currency before it failed.

There are currently around 35 million blockchain wallet users worldwide — about 1% of ’s total active user base, though presumably there’s some overlap. On day one, in 2020, Libra will be available in two of the most popular messaging apps, which are available on every smartphone: WhatsApp and Messenger. That’s far more potential users than have ever even heard of Bitcoin.

There are two parts to all of this that are important to understand: First, the digital “currency” itself, Libra, and second, a separate product, Calibra, which is the digital wallet that holds Libra for you, similar to a Venmo account or even an old-fashioned bank.

Libra is different from other cryptocurrencies in an essential way — the fact that it’s a cryptocurrency in the first place is shielded from the user. Sending or receiving Libra appears to be no more difficult than converting money from U.S.

dollars to Euros, and the user doesn’t need to bother knowing about the inner workings of blockchain technology to actually use it. The currency is right there, in Messenger and WhatsApp, and you don’t need to worry about configuration, wallet storage, or anything else.

Simplicity will be the appeal: You might want Libra — “ Money” for all intents and purposes — when you travel abroad to buy from local vendors who could accept it on their smartphone, for example.

On paper, this might all remind you of a service Venmo — and in a way, it’s conceptually similar. The key difference is that Venmo was always intended for sending money to friends in the U.S.

, while Libra will be globally available.

The goal is for it to be used for paying your bills, Spotify subscription, or even physical goods in stores — you won’t need to withdraw it to your bank account.

It’s different than other “traditional” cryptocurrencies. Bitcoin, Ethereum, Ripple, and a plethora of other digital currencies failed to gain mass appeal because their creators focused on technical details rather than marketing an idea to consumers. No one cares about terms “fiat-backed,” “contracts,” or “forking” — ubiquitous on the websites of most any blockchain product.

And un Bitcoin, funds in Libra are invisibly backed by real-world assets that the company uses to secure its value. That essentially means that for every dollar you put into Libra, the association will “buy” an equivalently-valued asset — a currency or government-issued bond — and then hold that real money in the “Libra reserve.”

Because of this arrangement, Libra will ly maintain a more stable value than other cryptocurrencies. There’s certainly some forceful skepticism about this — HuffPost called it “a really stupid investment scheme” — but the idea might help build trust in Libra and ease concerns about a “run on the bank” scenario, where people withdraw more money than is actually available.

For this reason, Libra is also subject to inflation and other value fluctuations, very similar to the way traditional currencies are controlled by a country’s central bank. Essentially, it means there’s only a finite amount of Libra in circulation, and if people buy a lot of it, the price might go up — just real-world currencies do.

Libra will be controlled by an “independent” group of companies that can issue or constrain supply to stabilize the price.

This could circumvent many of the problems that Bitcoin, Ethereum, and other currencies have faced with “flash crashes,” where they rapidly gain or lose value in a short period of time.

That said, Libra doesn’t actually have a proper monetary policy in place right now to deal with this, which is a problem.

These trade-offs fly in the face of many of the ideals originally envisioned for cryptocurrencies, but they should help avoid the violent swings seen with Bitcoin or Ethereum — which can technically be manipulated by those with enough money.

Credit: Libra Association

Crucially, has signed up a group of over 30 partners from across industries, all of which are juggernauts in their respective spaces. Visa, MasterCard, PayPal, and Stripe are founding partners, as are platforms Uber, Lyft, Spotify, and a group of well-known venture capitalists, including Andreessen Horowitz, USV, and Thrive Capital.

It’s an opportunity to make an end-run around the global financial markets

Why is this group such a random, unrelated set of companies, and why are they so interested in the currency? The answer is obvious: it’s an opportunity to make an end run around the global financial markets and the regulations that slow innovations that could change how we pay businesses as well as each other. With Libra, is able to avoid the complexity and cost of transferring money globally, which banks frequently make exorbitant profits from despite doing little outside of moving a bit of money around.

Libra completely cuts out the middleman for businesses that accept Libra as well, allowing them to avoid touching cash and accept money from anywhere. Say you’re Lyft and you want to launch in the Netherlands, for example, where credit card penetration is low. You need to implement the country’s custom payment system, iDEAL, to enter the market, or nobody will use the service.

This is repeated in almost every market, demanding a complex framework of custom payment tools for every single country. Libra would technically allow these companies to launch globally without requiring a credit card or bank to gain access, though of course it’s all predicated on whether people will actually use the service.

But remember: When it launches in 2020, Libra will be available in Messenger and WhatsApp, two of the most popular messaging services globally.

Which leads to…

The problem

Though Libra is technically controlled by the Libra Association, of which is just one part, the social media company has been leading its development.

And in the 24 hours after unveiled Libra, governments around the world expressed their concern about the currency. In Europe, politicians said it must not be allowed to become a “sovereign currency.” U.S.

senators called for to halt development immediately and send executives to a hearing on July 16.

Where it seemed Libra was perfectly positioned to dominate the next generation of payments, failed to understand how poorly timed the launch appears to those outside the company.

After the Cambridge Analytica scandal, along with the company’s inability to properly secure its own platform, let alone use basic security practices, governments around the world are extremely hesitant to take the company at face value.

Combined with renewed concerns about the company’s monopoly in social media between Messenger, WhatsApp, and Instagram, this new currency places in the crosshairs of regulators. It may be the final piece of evidence the perfect antitrust case was missing.

failed to understand how poorly timed the launch appears to those outside the company

Libra is a perfect example of a company leveraging an anticompetitive advantage to guarantee the success of a new product by simply adding it to its own existing apps — and trying to hide the fact that it’s doing so.

It seems brazen, and I’m not sure fully understands that it has given regulators the ammunition they need to argue that it should be broken up sooner rather than later.

Between Messenger and WhatsApp alone, Libra could redefine the global payments landscape without ever consulting any country’s government, and it could potentially cause serious implications for a country’s economy — as Quartz noted, Libra may become a preferred venue for remittances, where diaspora populations send money back home. That, in turn, could have a significant impact on local businesses that would traditionally handle those financial exchanges.

Why should it be allowed to run a currency at all, when it can barely operate , the product, properly?

, in its rush to dominate the payments industry, may have miscalculated how frustrated regulators already were — and how quickly they are now willing to move in response to anything the company launches.

Instead of proving to regulators that had listened, and actually improved its platform as evidence, it’s acting as if the last few years worth of endless scandals don’t matter.

Why should it be allowed to run a currency at all, when it can barely operate , the product, properly?

Sure, Libra is engineered to look it’s not really at all, with a nonprofit organization based in Switzerland governing it and a set of companies guiding its development. But in the same way that Google makes Chrome “open source,” despite overwhelmingly dictating the direction and codebase of the popular browser, Libra is, in the end, a product.

The idea of a global digital currency transforming the way we pay for everything from an apple to a car seems a nice idea, but with at the helm, it’s hard to imagine this truly getting off the ground. Then again, ’s very size is what makes such a large-scale cryptocurrency project possible to begin with.

Still, governments around the world are unly to allow it, because if we’re honest, nobody wants Mark Zuckerberg to consolidate control over a single global currency, on top of everything else.

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