The social network on Tuesday officially unveiled Calibra, a cryptocurrency system launching in 2020 that includes a stablecoin called Libra, as well as a digital wallet inside Messenger and WhatsApp that will let users store, send and receive Libra. Pegged to a basket of government-issued currencies to avoid pricing volatility, Libra will launch with at least 29 partners, including Visa (V), Mastercard (MA), Uber (UBER), and Spotify (SPOT), and be governed by an independent council. According to 20-year-old Bitcoin millionaire Erik Finman, Calibra is an “amazing” product that will help legitimize cryptocurrency and bring mainstream attention to the overall space.
“This is going to be huge for the cryptocurrency space — it’s a huge deal,” says Finman, founder of the bitcoin investing platform CoinBits. “If cryptocurrency wasn’t obvious before, it’s really obvious now. It’s here to stay, and it’s here forever. This isn’t just a project anymore or something that’s in the gallows of the internet.”
Finman carved out a reputation among crypto enthusiasts for investing in Bitcoin (BTC) back in 2011 at $12 a coin using $1,000 his grandmother gave him. The 20-year-old’s investment ballooned to $4 million during Bitcoin’s all-time high in 2017, earning him the nickname “the teenaged bitcoin millionaire.” Incidentally, Finman also won a bet with his parents: if he became a crypto millionaire before he turned 18, he could skip college.
But as exciting as Calibra sounds, it also raises some “scary” possibilities, Finman adds.
“There’s a part of me, again, that says that [Calibra] is great for the credibility of cryptocurrency,” Finman emphasizes. “And while that’s probably the best thing from Mark Zuckerberg’s point of view, it could also be the worst thing depending on how Calibra evolves. Look at all the crazy stuff Facebook’s been doing with your privacy and security.”
Besides using Facebook user data towards its sophisticated advertising products, the social network has also come under fire over the last 18 months for incidents regarding user privacy. The Cambridge Analytica scandal from March 2018, for instance, resulted in voting firm Cambridge Analytica gaining access to the information of up to 87 million Facebook users without their consent. Indeed, Facebook anticipates paying a $3 billion to $5 billion fine from the Federal Trade Commission for its privacy lapses.
In its white paper published this week, Facebook added that Calibra will be independently governed by the Libra Association Council, based in Geneva. And while the group will serve as the entity through which the Libra Reserve — a reserve of "financial assets" for backing Libra — is managed, Finman indicates this more “centralized” model could be used for Facebook’s benefit. After all, Libra will be stored in digital wallets hosted by Facebook-owned services such as Messenger and WhatsApp.
“That's very much against the mood in which cryptocurrency was invented, which was, you know, freedom, decentralization, no one to shut it down, and no centralized control,” Finman contends. “The Libra Association and Facebook basically control the development of Calibra. It’s scary, inherently, because it’s run by a massive giant entity, and it’s scary, especially with the reputation Facebook has.”
Only time will tell whether Finman’s fears are founded.
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