Cryptocurrencies are volatile due to their barriers to widespread implementation—not everyone is suddenly accepting Bitcoin as payment. Facebook believes it can spur worldwide adoption of Libra because of its preexisting market.
Libra will be built into third-party wallet apps accessible via WhatsApp and Facebook Messenger. Users can avoid fees often associated with credit cards and, most importantly, they don't need a bank account to get started. According to Tech Crunch's Josh Constine, Libra could help the 1.7 billion people worldwide without bank accounts to fully participate in the economy. Constine reports:
“Success will mean that a person working abroad has a fast and simple way to send money to family back home, and a college student can pay their rent as easily as they can buy a coffee,” Facebook writes in its Libra documentation. That would be a big improvement on today, when you’re stuck paying rent in insecure checks while exploitative remittance services charge an average of 7% to send money abroad, taking $50 billion from users annually.
Facebook doesn't exactly have a clean bill of health when it comes to responsibly handling users' data, and many are terrified by the idea of Facebook having access to users' financial information.
Shortly after Facebook announced its plans for Libra, House Financial Services Committee Chairwoman Maxine Waters doused Facebook's excitement, calling for its executives to testify before Congress before moving forward with development. Reuters' Pete Schroeder reports:
“Facebook has data on billions of people and has repeatedly shown a disregard for the protection and careful use of this data,” [Waters] said in a statement. “With the announcement that it plans to create a cryptocurrency, Facebook is continuing its unchecked expansion and extending its reach into the lives of its users.”
The public is right to be suspicious of Libra. Facebook has not proven itself to be responsible with user data over the past four years, and users should have as much information as possible before deciding to use this new cryptocurrency.
Facebook is already on top of concerns like those expressed by Waters. According to Tech Crunch, Facebook won't have full control of Libra; the company will only have a single vote among the 28 members of the Libra Association. Facebook recruited companies like Visa, Uber, and Mastercard to be a part of this not-for-profit body, which will oversee Libra's development and the reserve of real-world assets that give the Libra cryptocurrency value.
Facebook is jumping on privacy concerns proactively. According to Constine:
Facebook is launching a subsidiary company also called Calibra that handles its crypto dealings and protects users’ privacy by never mingling your Libra payments with your Facebook data so it can’t be used for ad targeting. Your real identity won’t be tied to your publicly visible transactions.
Again, Facebook's goal with Libra is to make cryptocurrency ubiquitous throughout the world, not to take advantage of user data. According to Facebook's white paper, "Libra’s mission is to enable a simple global currency and financial infrastructure that empowers billions of people." The aim is economic empowerment. Constine reassures readers:
Facebook’s audacious bid to create a global digital currency that promotes financial inclusion for the unbanked actually has more privacy and decentralization built in than many expected.
And yet, Facebook's efforts still seem suspect. Tech Crunch's Constine also reports:
...Facebook/Calibra and other founding members of the Libra Association will earn interest on the money users cash in that is held in reserve to keep the value of Libra stable.