Facebook’s Project Libra: Will Libra Sputter Out or Spur Central Banks to Introduce Their Own Unique Cryptocurrency Projects?

Abstract

In the evolution of money, the advent of cryptocurrencies would have been an inevitable and a natural phenomenon, but the farfetched implications of the 2008 global credit mayhem only accelerated their arrival. Facebook’s claim of the Libra Blockchain as a decentralized network is far from reality, in fact, it is a lie because Libra is designed to be launched in 2020 as a permissioned (centralized) system where billions of transactions will be governed by the 28 heavyweight validator-firms (nodes), each of which is a member of the Libra Association. Facebook has stated that the number of validators will reach 100, when this occurs, each validator including Facebook will have an equal share (i.e. 1%) of voting rights. This is an improvement over the Board of Governors of the Federal Reserve System, not all of the twelve Federal Reserve Banks have voting rights; besides the Fed Chairman and president of the Bank of New York (Vice-Chairman), four of the remaining eleven Reserve Bank presidents serve one-year terms on a rotating basis. Contrary to the huge hype filled with hopes, Bitcoin (as well as other existing 2,300 digital coins) on account of extreme volatility has failed to become a simple global crypto-currency for everyday life, enabling people to transfer money to individuals or businesses anywhere in the world and purchase desired products and services online within seconds without going through unnecessary hassle (i.e. limited or no access) and financial burden of high transactional costs. Facebook’s Libra seems to possess all necessary elements to become a viable alternative to the U.S. dollar only if major central banks (particularly the Fed and ECB) and governments allow it.