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Facebook’s new Libra coin has a lot of things going for it, but could it ever rival the U.S. dollar?
Libra Is Big, but It’s Not That Big
In a recent podcast, Facebook’s head of blockchain development David Marcus says that the company is hoping the new Libra currency will gain enough traction in the space and enough attention amongst both investors and traders to surpass USD. It’s certainly an ambitious feat, but it’s also somewhat unrealistic – at least for now.
For one thing, the U.S. dollar has an established history. It is used by virtually everyone in the United States to either make purchases, satisfy bill payments or keep in the bank for sustaining monetary stability. Facebook Coin is still very new to the financial space and is already suffering from a previous reputation – one marred by deception, lies and potential profit.
Of course, we’re referring to the Cambridge Analytica scandal that occurred in 2018. Facebook’s Mark Zuckerberg was grilled hard by Senate members after it was revealed that the social media giant was selling the private data of its users to third parties for advertising purposes. As a result, trust in the platform fell to record lows.
Many people are still suffering from a lack of trust, and don’t see Facebook as a legitimate enterprise. The idea of giving the company access to their financial information is ludicrous, and potentially opens the door to more significant problems down the line. Libra is not even available yet, but it’s already suffering from the reputation of its parent company.
The second issue is that Libra likely can’t surpass the U.S. dollar considering it will be tied to it. By all accounts and reports, Libra will allegedly be a stable currency, meaning it will be tied to USD so that it is not vulnerable to the same price swings and volatility one often witnesses with mainstream cryptocurrencies such as bitcoin, Ethereum and Litecoin.
Given its “stable status” and its connection to USD, Libra probably won’t increase or decrease in value unless USD does so. Thus, such an idea becomes null and void from the beginning.
Some People Don’t Enjoy Crypto
Third – and this is probably the largest reason – is that at the end of the day, there will be many people in the U.S. (and abroad) that will never use cryptocurrency, either out of ignorance, mistrust or other reasons. However, everyone in the U.S. is required to utilize USD because it’s the official currency of the country they live in. Thus, USD will live on, whereas crypto is not required by any law or regulatory statute, and for that reason, there will be many people in this country that never touch it.
Libra is working towards some large and even admirable goals, but the chance that it will accomplish all of them feels relatively slim.