Experts are concerned Libra will put people’s privacy and security at risk
One of the most concerning things to come from Facebook’s cryptocurrency reveal is the number of traditional finance players who are supporting it. These are many of the same people who shunned Bitcoin, and other cryptos, and still shun them. In light of the hype surrounding Facebook’s new “Libra” cryptocurrency, it’s important to pause and be just as critical of it as other cryptos.
Examining Facebook’s Libra without the hype
The overall concern raised by observers of Facebook’s cryptocurrency stem from the social media company’s disconcerting past. Facebook has had to disclose several breaches that resulted in its subscribers’ private information being disclosed.
In addition, there are many other potential pitfalls that should be kept in mind about Facebook’s newfangled crypto effort.
Saving the world of the underbanked and unbanked
Facebook has long touted itself as “bringing the world together.” This cryptocurrency is being touted as a means to help those who do not have access to traditional banks.
However, there are questions. For example, Alex Gordon-Brander of Omega One, said he was not sure if Libra is a savior for the underbanked or non-banked. It is a savior for those who have already invested time and energy in some aspect of cryptocurrency, he said.
“The FB announcement and efforts—including its high-end backers—legitimize digital currencies. Yes, there will still be skepticism about various currencies and the dark underbelly of this industry, but companies and the financial community will figure out ways to leverage Libra and other worthy currencies for the same reasons other assets are traded daily.”
How Facebook handles security threats will be crucial
Tech entrepreneur Hector Hoyos, the founder of Hoyos Integrity, spoke about the potential threats Facebook’s cryptocurrency will face. For example, he said he worries about anti-money laundering (AML) and know your customer (KYC) issues that Facebook could overlook.
Additionally, given the likelihood of hacking, Facebook’s attention to its digital wallet is flawed, putting consumers in the Facebook ecosystem at substantial risk, Hoyos said.
Observers have also noted that Facebook may not have the backend to support the crypto platform they’ve been touting.
Will Facebook be able to secure people’s trust?
Steven Elisc, executive VP of Corporate Development at DMG Blockchain, said he expects Facebook’s privacy concerns to remain at the forefront. He said:
“Just as Alipay and WeChat Pay are vehicles to potentially allow the Chinese government to monitor the transactions of its citizens, in a similar way, Facebook could allow transaction data to be used in a way that invades user privacy. Given ongoing news about Facebook in this regard, we expect privacy concerns to remain at the forefront.”
Effects on Bitcoin and other cryptocurrencies
Avani Desai, is president of a security and privacy compliance assessor called Schellman & Company. Desai joined many others in saying that Facebook’s crypto could be the catalyst for mass adoption of cryptos, pushing them to the next level. She pointed out:
“Up until now, we haven’t seen institutional cash come into play due to regulations and, in my humble opinion, fear of the unknown. But Facebook’s Libra will give digital currencies a level of legitimacy and acceptance we have not seen previously while providing more options than established cryptos.”
Likening Libra to a “security backbone,” Desai acknowledged it will allow Facebook to gather more data. The handling of such data will be at the core of its success, considering it’s done a poor job in the past. According to Desai:
“If Facebook develops this right, they will also be able to scale better than bitcoin and Ethereum while increasing speed and agility and revamping the crypto landscape. Because blockchain is open source, the benefits to this kind of a payment platform not only suit Facebook, but the consumers who buy, sell, and partner with the organization. And if these developments progress the right way, the crypto market will actually be able to achieve the stability it needs.”
Calling herself a crypto evangelist, Desai said Facebook has an opportunity here that will benefit newbies and veterans alike.
“This is all while increasing their own questioned transparency and further safeguarding the personal data it would be collecting.”