10 Reasons Why People Hate Facebook's Libra
Data scandals? Antitrust laws? Just a bad investment? The reasons why people hate Facebook are not exactly few and far between.
Through Mark Zuckerberg's senate hearings about Facebook's privacy policies and data practices, and the recent announcement about the creation and release of Libra (a cryptocurrency that will allow Facebook users to perform financial transactions online), many people have many questions.
The first of which may even be, what is Libra? Here's what we know in a nutshell: It's a kind of cryptocurrency—sort of—that will be under the supervision of the "Libra Association." This is apparently an independent non-profit in Switzerland, created "to validate transactions on the Libra blockchain and to manage the reserve Libra is tied to and allocate funds to social causes. It will be run by the Libra Association Council who will take equal votes in order to make policy and operating decisions.
Additionally, once Libra is released, Facebook is apparently taking a step back, and letting the Libra Association take over all leadership and supervision of the currency. However, there will be more involvement with the digital asset via an app called Calibra: Facebook's digital wallet. This will allow users to manage their libra transactions in their digital wallet.
With trust of Facebook low, and Zuckerberg's ambition high, many people are prepared to protest the creation of Libra, and are already vehemently expressing their opinions on the matter. That's why there seems to be a mounting amount of reasons why people hate Facebook's Libra.
1. Libra could change the landscape of banking.
One major fear about the new currency is that if Facebook creates a cryptocurrency that eventually has equal value to the dollar or euro, it'd be unregulated by any central banks, which could seriously mess up previously existing systems of power. For example, in the US, the President is the ultimate person in charge of the dollar, so a new currency that is unregulated by political governance could threaten the value of the dollar, and therefore the strength of the political office itself.
In fact, Bitcoin arose during the financial crisis as a way to circumvent and undermine government regulation of the economy, and to avoid the amount of control that the government had over peoples' wallets.
2. People may not even use it.
There are over 1,000 cryptocurrencies that you can trade today, so it's not like Libra is without competition. And with consumers' privacy concerns around their data held by Facebook already, it seems that Facebook, being the original creator of Libra, may put the cryptocurrency on stable ground to begin with. After all the controversies and hearings surrounding Facebook's data mining, and data selling practices, most people don't trust the social network anymore.
3. Um hello, privacy?
In light of already muddied privacy and regulation concerns, Facebook promises to implement similar verification and anti-fraud measures to those used by banks. Additionally, there will be live support for anyone to reach out about their concerns, and if anyone loses money due to fraud, Facebook mentioned they'd provide refunds. Once Libra is launched as well, they will have a "bug bounty" program so that cryptocurrency experts can find weaknesses in the cryptocurrency codes and they can be weeded out immediately.
Facebook claims that any data about users' transactions will be kept separate from their Facebook ad profiles, and as Libra is a cryptocurrency, their profiles will have pseudonyms.
However, after learning that Facebook and other tech companies had been collecting information and profiting off of that data for years, many have either left the social network or don't use it as much anymore. Learning that their data was sold to advertisers in order to help advertisers reach their target audiences didn't sit well with many people—and they ultimately don't trust Facebook as a company anymore to be making choices that are best for their consumers, rather than those that are best to increase their own revenue.
4. People are generally iffy about cryptocurrencies to begin with.
Another one of the reasons why people hate Facebook's Libra is because currency is based on trust—but currencies like the dollar or the euro can at least be physically held in your hands, whereas cryptocurrencies are totally digital unless you cash them out for physical currencies. This expounds on the mistrust already surrounding Facebook's new currency.
Additionally, with no centralized bank, many people are concerned about the value of their money, and the trust that their money will be in a safe place.
5. Seems like another way for Facebook to try to profit off a "humanitarian project."
In 2013, large claims were made about Facebook beginning a project called Free Basics to enable everyone to have free, basic internet. Zuckerberg wanted Facebook to partner with large institutions to have drones or lasers help bring internet to parts of the world without it. He believed that if everyone had access to the internet, that those in lesser-developed economic situations could use the internet for education and opportunities that would ultimately help them build a different future. However, many of those partners who initially joined Facebook in pursuit of finishing this project ended up backing out, and talk about Free Basics slowly tapered off.
Similarly, Libra, according to Facebook, has been developed to reach people without bank accounts. However, half of those adults without bank accounts live in just seven of the world's countries—and many of those have either banned or restricted Facebook and/or cryptocurrencies, or they have anti-money laundering laws that can keep Libra from ever thriving in those places. On the other side of the same coin, Paypal, a company striving to democratize access to financial services the world over, has already rescinded their support as an investor.
Though Zuckerberg's white paper outlining their business model claimed to be a humanitarian project, Libra, which he wants to become a global currency, could just be a way for him to try to change the public's view of Facebook.
6. It's supposed to be released in 2020, and Facebook has yet to release any information about how Libra will be regulated.
Zuckerberg claims that the Libra Association and Council will decide how Libra will be regulated, and will create a charter that pulls together all the decisions that are made—but, that still hasn't been released. And it looks like the charter would be made on-the-go, as people start to use the digital currency.
7. Libra is almost a hybrid cryptocurrency.
There are debates going on about whether Libra even is a cryptocurrency, and smart investors are always trying to find ways to protect their portfolio in a volatile market. It will operate on a decentralized blockchain—but Libra will not be decentralized like other cryptocurrencies are. Cryptocurrencies like Bitcoin allow anyone to create a "node" and be a part of that process of decentralization, but Libra's nodes will be run only by members of the Libra Association so that the blockchain can process more transactions per second.
One of the weaknesses with cryptocurrencies is that their value fluctuates in the stock market a great deal, so those investing in the various currencies can never be totally certain that their money will gain value or lose it. Facebook is trying to alleviate that by making Libra what is known as a "stablecoin," meaning that it's tied to a reserve of money created by members of the Libra Association, and is exempt from the typically volatile characteristics of cryptocurrencies. The Libra Association has 28 members including Stripe, Visa, Mastercard, eBay, Lyft, Spotify, and more. And Libra's reserve is created with 50% US dollars, 18% euros, 14% being Japanese yen, 11% being pound sterling, and 7% being Singapore dollars."
Also, since Libra will be tied to a reserve containing various currencies from around the world, Libra's value will not experience the volatility typical of other cryptocurrencies like Bitcoin or Ether. Typically since cryptocurrencies are totally autonomous from other currencies, which is part of their appeal, Libra is connected to a reserve of the world's currencies. In other words, it's more stable, but has less autonomy.
Similarly, Libra won't make payments entirely anonymous, which is also one feature that is more typical of cryptocurrencies.
8. If Facebook moves into financial services, they'll become too powerful.
Facebook has already taken control as a powerful platform for advertisers to reach their audiences, and for anyone to contribute to the "echo chamber" effect—and we're still learning how exactly these affect, and have effected, us as communities and nations. If Facebook continues to move into new sectors and industries, there's a chance that it could run into problems with antitrust laws. The government is already pretty leery about tech companies extending their reach any further.
Facebook has already proven to collect and profit off of their data mining strategies—and there's really no reason to believe that this has changed. They've made promises before—and broken them not long after making them.
9. Many people are still wary of paying for things with their mobile device rather than a credit card or cash.
Especially in the US, most people would still prefer to pay with cash or a credit card then to use their mobile devices. While your phone and your wallet are targets for others to steal, you only pull your wallet out to pay for things when you need to. Your phone, on the other hand, you pull out to text friends while you're headed to meet them, to read articles on the subway, or to check for directions when you're somewhere new. Many people don't even want to have their card information in the wallet apps on their iPhones because if their actual card is in there and they drop their phone without realizing it, someone could very easily steal their phone and clean out their bank accounts.
10. Libra is corporate cryptocurrency.
While Facebook hasn't technically become a selling platform like Amazon, their impact on advertising and influencing consumers' buying decisions is incontrovertible. And by providing Facebook's users with a currency that Facebook has a hand in controlling, they have even more control over these consumers' decisions—which might be something to be concerned about.
Any move towards using cryptocurrencies in the future is already looking like an uphill battle when considering its use in mainstream, everyday transactions. But the history of cryptocurrencies as alternatives to government supervised financial institutions, together with Facebook's past and current controversies surrounding data collection, make Libra's release and success look unlikely. There are many more reasons beyond these reasons why people hate Facebook's Libra, and as we gain more understanding around how Facebook has already impacted our cultures and relationships to technology, more criticism is likely to arrive.