- Facebook, the social media giant, has also made its entry into the cryptocurrency world through its digital currency called ”Libra”.
- The grand vision of the association is to build a stable cryptocurrency for a more inclusive global financial system on a secure network.
- The Libra is hoping to achieve this by bringing in together millions of non-bankers in the world.
The digital currency is taking power over the world through its services and applications. Facebook, the social media giant, has also made its entry into the cryptocurrency world through its digital currency called ”Libra”. Libra is different from Bitcoin as it will take the support of a governing body whereas Bitcoin does not. It is designed such that it is less volatile, and also this design to make it similar to a traditional currency.
It is reported that Facebook will soon begin the cryptocurrency’s trading. Few of the representatives of the “Libra Association” include Facebook, Spotify, Uber and PayU. And although powerful and influential companies are supporting the Libra, there have been traces of doubts amongst people if it is a good idea.
The grand vision of the association is to build a stable cryptocurrency for a more inclusive global financial system on a secure network. The Libra is hoping to achieve this by bringing in together millions of non-bankers in the world. This includes the people who face difficulty in transferring money anywhere in the world quick and safe and also inexpensively.
Working of the Scale
Libra believed to run on a blockchain from around 100 different computer servers. The blockchain algorithms enable the scripting and interactive use, along with an interface with various file formats and options through the command line programs. Byzantine fault-tolerant consensus approach used to increase the safety. The role this approach must play according to its theory is that it should almost make the disruption of the entire blockchain impossible even if the compromise in server occurs.
An essential capability of this scale is that it can offer 1,000 payments per second, making it around 500 times more efficient than Bitcoin cryptocurrency.
Major Concerns
Despite all of the efficiency it offers, the United States government seems not to convinced with it. The association has marketed the scales to be a “stable coin” that in particular is easy for regulation to win over the other cryptocurrencies used today.
The scales being used as a security by some bonds and currencies is the danger that could be possessed. One needs to understand that the status of the Libra as a global currency implies that it will fluctuate just like any other currency and differently.
It even has the potential to resemble a volatility index if in case shaped by the underlying assets. “Too Big To Fail” would be the phrase used if it gets too popular. What haunts is the fact that there would be no Libra central bank to fix the damage being caused by the run against the Libra, if it ever occurs.
Is there a place for the scales?
The Association of German Banks has proposed offers for the addressing of these concerns, to limit the balance of the transfers and to prevent it from handing out loans. However, this indicated the undermining of the Libra’s ambitions.
The establishment’s banking system has appeared to be ready for the accommodation of the Libra and other upcoming “soft infrastructures”, the central banks have already agreed upon, despite all the concerns.
Author: Steve Anderrson
Read more at: https://www.thecoinrepublic.com/2020/04/12/facebook-social-media-giants-cryptocurrency-libra-safe-or-no/
