Thursday, June 20, 2019

Facebook’s Cryptocurrency: Stop It Before It Starts | Lawfare

For another Libra reality check, see Launching a Global Currency Is a Bold, Bad Move for Facebook | NYT; also see Facebook called before Senate panel over digital currency project | Reuters
"Fortunately for the rest of the world, Libra may well fail. People prefer assets that hold their value relative to either the local currency or, in an unstable situation, dollars or euros. Nobody wants to receive $10 from a friend only to have it turn into $9.80. But since Libra pegged is to a basket of currencies, it is not actually stable. Like other cryptocurrencies, every Libra transaction thus involves exchange rate risk, and the only way Libra can succeed is if Facebook makes a concerted effort to force its adoption.

Libra succeeding would be far worse. What currently limits how criminals can use cryptocurrencies is the cost of currency exchange and the inherent volatility of the currency’s value. Reduce or eliminate these constraints, and there’s likely to be an inundation of new ransomware, extortion and online drug trade. Libra intends to reduce (but doesn’t eliminate) volatility, and the only way Facebook can get widespread adoption is through making easy onramps and offramps. A Libra “success” would represent a huge policy failure. It is better to kill this now than let it even get a chance to succeed."
Facebook’s Cryptocurrency: Stop It Before It Starts | Lawfare

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