Why Facebook’s Libra Cryptocurrency Is In Trouble
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Why Facebook’s Libra Cryptocurrency Is In Trouble

I actually don’t know if
libra is going to work, but I believe that it’s
important to try new things. When Facebook first
announced it was getting into the crypto
business with a basically unregulated currency called
libra, the reaction from Wall Street and
government bankers was about as expected. Libra raises
a lot of serious concerns. I’m not a big
fan of what they’re doing there. I think it’s
a big mistake. It was a neat idea
that’ll never happen, and I have nothing else to
say about it. Libra is in trouble. The social media giant had
lined up a long list of corporate backers
for the initiative, including major players in
the payment space. In early October 2019,
PayPal became the first company to back out
of the libra coalition. That led to an exodus
of other companies from the project. MasterCard, Stripe, Visa
and eBay all followed PayPal and
ditched libra. So, why are all
these companies ghosting Facebook’s digital currency all
of a sudden? First, let’s explain how
Facebook got into another mess like this. I like the libra concept, but
you got to drop it. It’s clearly doing more
harm than good. Facebook first announced libra
in June 2019. Introducing Libra, a
new global currency. It formed the Libra
Association in Switzerland to run the cryptocurrency project
and lined up 27 companies to oversee it. Facebook also set up
a subsidiary called Calibra, designed to host the
financial services and payment software built on
top of the libra digital currency. Why did
Facebook get into crypto in the
first place? Facebook is big.
It has 2.41 billion monthly
active users. That’s a huge base. Even if a quarter of
the users ended up using Libra for payments. That’s
600 million people, about twice the population
of the United States. Facebook, though, also has
a ton of baggage. Think 2016 presidential
election and Russian hacking kind of baggage. So, when a company that
big and that influential plans to introduce a
product that could potentially disrupt the
global financial community, you can
see why U.S. lawmakers are paying even
closer attention to the social media giant. This is Facebook’s currency
chief David Marcus testifying before the
House Financial Services Committee back in
July 2019. The reason we designed libra
in such a way that Facebook will only be
one among 100 different members of the Libra
Association and we’ll have no special privilege, means
that you will not have to trust Facebook. Well except, Mr. Marcus, you know
better than that. You know that only Facebook
has access to 2 billion people and all, all
to say that, that you are just one of many
is simply, is simply not true after people’s data
and private messages have been stolen. And this
is Facebook CEO Mark Zuckerberg testifying before
the House Financial Services Committee about
the proposed cryptocurrency in
October 2019. I want to be clear. Facebook
will not be a part of launching the libra
payment system anywhere in the world, even
outside the U.S., until the U.S. regulators approve. Lawmakers
are really, really nervous about Facebook
getting into digital currencies. Libra could be
misused by money launderers and
terrorist financiers. Cryptocurrency such as
Bitcoin have been exploited to support billions
of dollars of illicit activity. Facebook designed libra to
be a digital global currency. Like other
digital currencies, libra will be built on top of
a blockchain or a digital ledger. Unlike other
cryptocurrencies, libra would be backed by a
basket of real world currencies. That would
stabilize its price, protecting it from wild
swings seen in the bitcoin market. The libra
reserve will hold bank deposits and short-term
government securities for every libra coin
created online. If all goes according
to Facebook’s plan, users would have a virtual wallet
where they could buy, sell, send and receive
libra through platforms like Facebook or
Instagram or WhatsApp. And, those payments would
move within seconds for small fees. With bitcoin
transactions, it could take several minutes to
confirm a transaction. And in some cases
cost a few dollars. Bitcoin is known for
its volatility and steep price swings because it
isn’t backed by government. That means things
like inflation and monetary policy don’t
influence its value. Instead, cryptocurrencies move
with supply and demand and basic market
forces, fear and greed. Bitcoin, for example, has
a fixed supply. The total number that will
ever be minted is hard-capped at 21 million,
and experts say that hard cap won’t be reached
for another 120 years. Facebook says all that
volatility wouldn’t happen with Libra because it will
be backed by a bunch of currencies, effectively
maintaining a stable price even when
demand changes. I think Libra is being
designed right now to be spent because it’s a stable
coin and it’s pegged to a basket of currencies,
and so most people today are going to assume
that people will be buying burgers or coffee. That’s Tom Lee. He’s head of research
at FundStrat Global Advisors, an independent
research firm. He says Facebook entry
into cryptocurrencies is a huge positive. It brings a
lot of credibility to space, but also with its
2 billion users, it’s a massive increase in the
addressable market, and arguably one of the
biggest headwinds for crypto adoption has been the user
interface or the ease of sort of
finding on ramps. Libra would use blockchain
technology, which is what all cryptocurrencies
run on. The blockchain is a
secure, digital collection of financial accounts. So, it’s basically a
decentralized bank ledger. There’s no middleman. The
currency is exchanged person to person and
recorded on the blockchain so you can see
who owns what. Traditionally in crypto, anyone
could access that blockchain, but not
with Libra. This is David Yermack. He chairs the finance
department at New York University’s Stern School of
Business and he teaches courses
on cryptocurrencies. It’s very different
than cryptocurrency like bitcoin or ether, which
is decentralized, has no leadership and relies on
a community of people who compete to build the
blocks that update the transactions. Because of the
design of something like bitcoin, it really
can only accommodate a small amount of traffic,
but something with central management like libra
could really grow to almost any size
that you wished. Libra would be
permissioned, which means transactions can only be added
to it by a group of trusted parties. That’s where the Libra
Association comes in. It’s the Swiss-based consortium
of nonprofits and companies like Lyft,
Uber and Spotify. Each partner of the
Libra Association invested a minimum of $10 million
into the project. David Marcus is the
Facebook executive leading the blockchain initiative, who
also once served as the president of
PayPal, previously testified to Congress that libra would
work more like a traditional currency than
a cryptocurrency. The intent of libra is
not to compete with other cryptocurrencies. It’s to compete
with the real currencies issued by
the central banks. That raised a red
flag among government regulators. And that’s a
big reason why libra’s corporate backers
began fleeing. Zuckerberg took heat from
lawmakers looking for clarity. Given the company’s
size and reach, it should be clear why
we have serious concerns about your plans to
establish a global digital currency that would
challenge the U.S. dollar. For the richest man
in the world to come here and hide behind the
poorest people in the world and say that’s who
you’re really trying to help. You’re trying to help
those for whom the dollar is not
a good currency. Drug dealers, terrorists,
tax evaders. He acknowledged the risk
of digital currency like libra poses, but also argued
it could ensure the U.S. position as an
innovative financial world leader. I just think that
we can’t sit here and assume that because America
is today the leader, that it will always get to
be the leader if we don’t innovate. And innovation
means doing new things. And that does mean
new things have risks. And we need to address the
risks and we need to be careful in doing that. But when pushed to
explain why corporate backers exited the libra project,
Zuckerberg put the blame on risk. Why
have they departed? Scores of stable partners
have dropped out. Why? Well, Congresswoman, I
think you’d have to ask them
specifically for- Why do you think
they dropped out? I think because it’s a
it’s a risky project and there’s been a
lot of scrutiny. Yes, it’s a
risky project. And when asked about
potential privacy concerns, he told Congress there
are millions who trust Facebook. Billions of people
come to our services because they trust that
they can share content, messages, photos, comments with
the people they care about. And more than
100 billion times a day, people do that. They share something with a
set of people because they know that that content
is just going to reach the people that
they want it to. So I think that if
we’re able to move forward with this project, there may
be some people who who don’t want to use
it because they don’t trust us or don’t like us. And that’s one of the
values of having an independent association where there
will be other competitor wallets and
other approaches, too. Zuckerberg spent most of
the hearing reassuring lawmakers libra wouldn’t
launch without approval from U.S. regulators. Facebook’s push into digital
currency served as a big wakeup call for
lawmakers and central bankers. It’s pitting Facebook
against the U.S. and other governments. And Facebook is
losing so far. In September 2019, France
and Germany both agreed to block libra. The
government said, “no private entity can claim monetary
policy, which is inherent to the
sovereignty of nations.” A few weeks later, libra
began to lose its corporate backers. PayPal was
the first company to leave in
early October 2019. Days later, two senators
on the Senate Banking Committee sent letters to
the CEOs of Visa, MasterCard and Stripe to
express concerns over their involvement in
the Libra Association. Senator Sherrod Brown of Ohio
and Brian Schatz of Hawaii told companies “to
proceed with caution” until Facebook provides more
details on the risks posed by libra, like
financing terrorism and disrupting the global
financial system. A few days after the
senator sent the letters, eBay, MasterCard, Visa and
Stripe announced they would leave the
Libra Project. The U.S. Treasury Department
had also been privately pressuring libra’s
corporate backers, according to the
Wall Street Journal. The opposition to libra
is coming from countries with established financial
and payment systems, where a majority of
the population already has bank accounts. That’s not really
the kind of user Facebook has in
mind with libra. It’s going after the
world’s unbanked population. You know, that unbanked world
is a lot larger than we all appreciate
because anyone living in the U.S., you know, has
pretty simple access and low-cost access to banks. Facebook points to statistics
that show 31 percent of adults in the
world don’t have a bank account. That’s about 1.7 billion people globally. And those numbers are
worse in developing countries and even
worse for women. Turns out, the unbanked
community of 1.7 billion people can be
leveraged through reliable internet infrastructure and
mobile phones. Those two things alone have
given rise to a new generation of financial
services without requiring fancy tech. 1.1 billion of those 1.7 unbanked people have
a mobile phone. For example, in
sub-Saharan Africa, simple, text-based phones have
popularized mobile money accounts. So, Facebook has a
lot to gain from winning over the unbanked
with a global payment service based on its
own digital currency. It’s not just Facebook
making waves in the digital currency market. China’s government also wants
a piece of the action. China’s central bank
has made some very public announcements that
they’re going to compete with the private
digital currencies in their economy by having a
crypto version of the renminbi, their
own currency. And there have been a
lot of central banks around the world researching this over
the last five or six years. The People’s
Bank of China announced in August 2019 that it’s
close to launching its own digital currency, saying
the rationale behind the move is to
protect its foreign exchange sovereignty. Some say the
move would encourage the worldwide use of
the yuan, the Chinese currency and the deputy
director of the People’s Bank of China’s Payments
Department said this currency will have similarities
to libra and would be as safe as
the central bank-issued paper notes Libra is really trying
to mimic what has already occurred in China,
where two social media companies, Tencent and
AliBaba, have launched payment services. They’ve run very, very quickly
and have begun to push aside the regular
banks as sources of payments for people. And if you look at
how quickly the Chinese social media companies have grown
and the fact that they’re now going abroad
into other countries, there seems to be
an opportunity for companies like Facebook, Google, Amazon
to create a very similar service. China’s central bank plans
to launch this digital token through a two-tier
system, where both the People’s Bank of China
and commercial banks would be legitimate issuers. All this means that Facebook
doesn’t just have to contend with the opposition,
with regulators and politicians. It means the
social media giant is also in a race against
time with governments that want to build their
own digital currencies. While libra still may be
in deep trouble, despite Zuckerberg’s performance on
Capitol Hill, the promise of digital currency
should live on, according to Tom Lee. I mean, I think the
future is really bright for digital assets. one, because I think it
is reducing a lot of friction in traditional
financial architecture. The average person spends almost
a month of every year paying for the
right to use banks. So, I think that that’s
a level of value capture that’s high, and so digital
assets are going to help sort of create
productivity around that. No one knows when
the federal government will enact regulation that would
impact how the libra coin operates or what
that regulation would look like. All they do know
is it’s coming at some point. Some even speculate
Facebook won’t be the first public tech company
in the U.S. to issue a currency. I don’t think other
majors Silicon Valley technology companies are far
behind, so I think Facebook is the first, but
I think we’ll see many other versions.

100 thoughts on “Why Facebook’s Libra Cryptocurrency Is In Trouble

  1. "…Bitcoin is known by its volatility and steep price swings BECAUSE he isn't backed by government…"
    "…that means the inflation and monetary policies don't influence it's value.."
    bravo CNBC! …keep your misinformation!

  2. I am completely against this. Unless it makes me tremendously rich, richer than Zukerburg himself, while everyone else see's no change in their day to day life. If I will need to work for a living….well, I already have to do that! So, if it's not going to straight up give me, personally, an extraordinary advantage over all others, I really don't see the point.



  4. Never let a corporation own the means of transaction of money flow, therefore it can control what you are allow to buy or sell..

    These things should be regulated under a governed organized officials instead of Facebook or big banks.

    CryptoCurrency is still the future for quick money transfer as blockchain will be interesting in other applications.

  5. Mr. Zuckerberg KNOWS that the content doesn't just reach those people you share with facebook, because YOUR COMPANY HAS ACCESS TO IT!

  6. We have been so much better off with the PRIVATE "Federal Reserve"! To hell with these jerKwads who print money from nothing then charge interest on it, and have zero audits of their books.

  7. Mark Zuckerberg has also tried to do other things than computer stuff and social media. But he keeps being blocked because the money and wealth is being controlled or they have their favours and a package (or bdsm package) that they buy or receive for their birthdays. He has tried to get involved in entertainment, media and other investments.

    I am not saying I like the Grey's, reptilians, the ones that are like snakes, the other hostile aliens or the garbage humans who are involved that also participate in making dark-web content and slave economies.

    Libra would be controlled, but it gives people an opportunity to make money and control their money and lives more. It opens up the idea of less of a slave economy.

    Mark Zuckerberg is a capitalist. But he has spoken about socialism many times and thinks if it's in budget everyone should have things that they do not because of their poverty compared to the ultra-rich, who also don't pay any taxes and steal tax-payer money which is illegal regardless of how they have changed and made up laws.

  8. Facebook has 2.41 billion active users puff that's low
    What about pornhub it's has 5.30 trillion active watchers per day lmao

  9. "Think 2016 Election" LOOOOOOOOOOOOOOOOOOOOOOOOOOOL These people STILL believe Russia or FB had something to do with Trump being elected. Amazing.

  10. You have no idea how much money the government is pumping (aka printing) every year. Sure it helps economic growth by lowering interest rates, but much of it is going into the stock market, hence the sky high prices and pe ratios.

  11. 14:01 "The average person spends over a month of every year paying for the right to use banks"

    What does that even mean?

  12. Why is the young man and his money balancing system in trouble, because he cornered the market, and balanced the scales. showed us the pork belly beast's face…sock it to them Zuckerburn…burn their asses up..excuse the typo i meant Zuckerberg…burn those lying asses up…thank you for giving us back our confidence in the youth of america, get those old asses who keep farting all over the house. Get them out of the house and fill it up with all your facebook followers…lmao…sock to them baby….you showed those dumb asses how dumb they really are listen to their questions. shaking my head….if they are way to dumb to say job well done…here's one that says "job well done" you the young peoples messiah, hero, superman…teach this generation all they got to do is use their good brain the CREATOR has given youth to take over the world and put this beast on their asses…thank you…

  13. 5:17 my boi talking about credibility with a can of chunky sirloin and Hormel beans with 2 bottles of whiskey on his desk

  14. First of all, what is money? Money has 3 functions: (1) medium of exchange, (2) store of value, (3) unit of account. The Fiat currencies we are using today have a value via government decree and people accept it for a medium of exchange. And we hope that the supplier of that money, the Central Bank, acts free from politics. BUT, can people accept other things in trade than the “traditional” Fiat money? What if A buys a car from B, they agree in the money type and the amount other than Fiat currency? What if the trade is documented in the ledger like in the cryptocurrencies, but the medium is not Fiat money? What if the Central Bank feels to bend to politics in the supply of Fiat money, instead of being a “bonehead”? What if a team of corporations backing a type of money carries its spine firm and strong and only listens to signals from its own body, instead of bending to outsiders (swift based)? Some people purchase products made with recycled papers/plastics only and recycle them. Others only recycle them, and some do not really make any attention to it. The choices we have today, at the end of the day develop our world to be a better place, instead of banning products that use “paper, plastic”, we would not have today recycling methods and perhaps better products tomorrow. People will decide what they want to purchase and what to use to pay for. Some days maybe the electric cars will/would be “banned” because a better system will be available. This is a progression. And today China has already launched 5G networks in 50 cities with Huawei 42% domination and Apple’s 4G is only 5% mshare, and so America is lagging behind. And perhaps corporations dropped out of the Libra Associations because they don't have strong bones to carry, they bend. And one day perhaps all countries will have their digital currencies, and one day every person can “publish” their choice of currency to pay with. Who thought that one day everybody can be a publisher and media actor/producer. Some countries are building walls, others are tearing them down.
    Although I do not have a Facebook account, I do support their initiatives.

  15. Stupid zuckerberg, just make a banking charter and hold yourself accountable. It’s very scary how opposed Facebook is to a banking charter.

    Facebook is going so data out of its way to not hold itself accountable its nuts. They setup a new organization that they control, but say they don’t and want to take deposits and transfer money without a banking charter. Just make a subsidiary llc and your covered there is no reason for a complete disregard to accountability.

  16. Of course governments dont want to compete with facebook on this idea, they would lose, so they cant allow it to happen. Still, it is forecasted that in a few thousand years the world will rely on only 1 digital currency.

  17. Dont trust libra, we shouldnt even have digital currencies when our money isnt printed by the us. We have several dollars for only a small reserve of gold. The us needs to get rid of the federal reserve but unfortunately they own the us now so its too late.

  18. Congress is a joke. Quote from Mr.Sherman, "The richest man in the world hides behind the poorest people in the world" …. we're not talking about your deployment waste of tax money sir. hahahahhaa.

  19. Funny that the people quoted here that speak AGAINST Libra are some of the biggest conmen of the existing financial system.
    Cryptos will see the end of you all in the next 5 years. And no, you won't stop Libra, no matter how much anti-lobbying and scare campaigns you try.
    We all know that Libra is BS, but people (in former colonies and the developing world) will still take it any day. You lot can keep the toilet paper USD for your own crackmarket gambling house.

  20. i pity you US, its going to be too late before you realise it :D. This is literally a race, whichever launch their crypto first, They win and will become the world leading crypto as global payment. US government still care about their own benefits and US dollar, when there is a CHINA as their biggest rival or competitor its almost too idiocy.

  21. I appreciate the information and I agree with you….but do you really not see your own biases…if you spend your life learning to be a reporter you do yourself and those who see your product a disservice when allowing your own opinions (or your editors) to dictate

  22. i use facebook to like dog memes and annoy my friend. i wont be using it to buy and sell.

    i mean they cant even protect my data never mind my money.

  23. Overall, it is a very informative documentary. I just don't quite understand how those unbanked people exchange their cash for Libra. Mail cash to Switzerland directly?

  24. We currently have pseudo currency made by game makers which gives access to currency exchange by people in real life.

  25. If I was asked why PayPal backed out. I would have said. Cause they are threatened. Libra would eliminate the need for PayPal. if I could just send you the money via text, why use PayPal. Why would visa and MasterCard ? Same reason. Why would the government be threatened? Cause government would have to trust their denizens to report how much they have spent for tax purposes. I mean you don’t halt car manufacturing because they cause vehicular accidents. There is always risk. I suppose plebs in this earth are not smart enough yet. For large corporations and entities the answer is the most pragmatic. This is not a social problem, privacy, crime or security. This is a money problem.

  26. I don't trust facebook with my pictures I will never trust fb with money, whether it is my money or someone else's, it isn't happening.!

  27. Atleast Zuks money had money assets to back not like money now days. His money had more backing than all the banks. They just afraid to see him win. Weird how PayPal left first that's why the rest did.

  28. Marks dream is to see everyone broke accept him, sad call his parents tell em their brat son needs a Time out. This is what happens when you don’t spank your kids they grow up thinking their god, u ain’t and facebook sucks

  29. its in trouble because its garbage. and there is already a clear winner to take this place… and it's not BITCOIN (AKA SH1TCOIN)

    It's XRP baby

  30. Biden is an absolute clown, forget about all those fake politicians. Yang2020 is the BEST Choice for America. -this message was approve by Tyler Nguyen

  31. Haha bankers thought they will hold us hostage forever. Even their own millionaires are tired of taxes.
    I rather go with bitcoin anyday tho , government backed Lybra can go to hell along with Mark.

  32. Mark Zuckerberg won't realize this (it's not in his best interest to do so), Facebook should not be trusted by anyone to work in world's best interest. However, we should not confuse what Facebook is trying to do with cryptocurrency in general. There is future for cryptocurrency and digital currency. There is no future for regularly inflated physical cash currency. Printing money on specialized paper and metals costs extra trillions of $s money and waste. We don't need that.

    But Facebook or any such social media need a separation from being regulator in a cryptocurrency future. There needs to be a separation of currency and social media platforms.

    Watch Veritasium to understand the evils of Facebook. Also I can guarantee Facebook will find this comment, identify me and start persecuting me the way it can (targetted ads).

    Targetted ads are greatest murder weapon in the world today, it helps the murderer to suicide anybody. Targetted bullets require the murderer to homicide the target and we have laws against the murderer in that case. Facebook with access to data on billions of users utilizing targetted ads is the world's greatest murder weapon.

  33. Libra does not make sense! Why would one want to pay Facebook a commission to transfer ones money! Bitcoin is bad enough to buy sometimes paying over 30% under price from seller! Libra will be just another ripoff on the public!

  34. First of all, anyone that watched the 6 hours or at least 1hrs of the Libra hearing before congress, can really see the lack of knowledge those fossils have towards technologies and social media. AOC which I thought would've had a better understanding of social media being a millennial, has no idea on how advertisement works. One of many spoiler alert AOC, hence companies use "terms and conditions apply". Her stupidity goes beyond me. I don't see her questioning fake news outlets for publishing fake news.

    At the current financial environment and federal banks bailout stupidity, Libra should NOT be backed by any currency but GOLD.
    "A global digital currency that will challenge the US dollar". Mmmm…. yes. US has been printing money to the extend of 60 billion dollars per month to give away to banks (Repo market). Just another way to BAIL out the banks. China and EU printing money whenever they like to so call apply QE to their economy.

    Current financial reforms have been proven to fail over and over again and people don't learn, just forget. Countries have decided to run a Turbo/Crony Capitalism instead of a Responsible/Advance Capitalism.

    Hence the development of bitcoin and other crypto currencies.

    CNBC, perhaps an analysis of:
    Why congressmen/woman are asking the wrong questions?
    Why not letting Mark Z. finish his answers? Without the arrogance of most of the congressmen/woman to stop him. Maybe, cause they want media outlets to show it as a "Grilling" instead of a "inability to comprehend Mark answers and look for a solution together".

    Those are my 2 cents.

    Note: No, I do not have FB, nor I approve their privacy policies. FB privacy policies should be dealt with prior to moving forward with Libra, however, it should not be the main excuse to stop financial progression and detachment from the broken financial system we currently are in.

  35. America is crushing Facebook but the beast is coming whom you can't question thus china….better let your own son ride to challenge him before its too late. The downfall of the UNITED STATES

  36. Can you just imagine what if Zuckerberg run for presidential election in the future when he has acces to Facebook and Libra?
    Maybe this is one of his reason not to fact checking or ban political ads

  37. So Facebook just has to buy land, declare independence and have libra as the national currency, or find some independent state that would agree to switching the national currency to libra

  38. Whatever conspiracy, world view or political train of thought you subscribe to, one thing is certain, the powers that be would rather the world descend into chaos and war than give up control. Crypto currency is never going to take over the bulk of transactions, not now, not next century, not ever.

  39. i support mark zuckerberg because the traditional ways of dealing with illicit payments and giving criminal organizations a platform to survive financially and grow no longer works the world needs to move forward instead of devlopping new methods and techniques to control criminal organizations we just block the ccurrency that is going to help alot of people and cut alot of fees, its just the fear that the banking establishment may collapse and i should always remind of what iceland did to bankers, maybe should find new strategies to survive in cryptocurrncy market but if libra is launched facebook is going to be above the bankers. which is something no one ever did in the modern history.

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