You’ve haven’t been paying attention if you haven’t heard about Facebook Libra. The blockchain project of the world’s largest social media platform is targeting a 2020 release of the Libra token. This stablecoin represents Facebook’s entry into the cryptocurrency market. But what does that mean for investors? Will Facebook Libra help or hurt the value of other cryptocurrency like Bitcoin, Ethereum, and Ripple?
About Facebook Libra
In a project that has been shrouded in secrecy for some time, social media giant Facebook has been quietly developing its own cryptocurrency. In June 2019 Facebook moved forward with confirming Libra by announcing that 27 partners had signed up to be a part of Mark Zuckerberg‘s blockchain platform.
Libra is proposed as a stablecoin, a type of cryptocurrrency that has a more stable value in relation to the USD and other currencies. Stablecoins are typically pegged at a specific value that does not fluctuate to the extremes of Bitcoin. There is no clarification yet on the specific aims Facebook has for its token. If the overall attitude of Facebook toward Libra is like that it shows toward social media, the goal will likely be domination of the cryptocurrency market.
This receives a mixed reaction from Bitcoin investors who depend upon the volatility of the market to produce trading profits. Many are wondering how Libra will affect other tokens that are regularly traded on cryptocurrency exchanges. Some think that the stablecoin could become a new standard for how tokens are traded. That has been met with skepticism and, in some cases, outright scorn.
It isn’t only investors that have concerns about Libra. According to a recent article in the New York Times, some of the very partners that have indicated participation with Libra are now expressing doubts about the platform.
Libra Partners are Concerned
It is customary for participants in an ICO or development of a cryptocurrency to show enthusiasm about the project. Some of the major companies that have been announced as Libra partners have been publicly supportive of the project. Others are taking a more guarded approach as they wait for more details to emerge.
MasterCard, Visa, and Uber are just a few of the prominent names that have indicated they will support Libra. A key part of getting the companies to agree to participate was a non-binding agreement which does nor oblige partners to use the token. They are also allowed to exit the partnership if they feel that Libra is a bad move.
The New York Times is reporting that seven of the 27 partners have expressed concerns about the project. The executives who spoke with the paper did so anonymously. This public expression of doubt may represent an underlying sentiment about the token and Facebook’s involvement.
More Resistance to Libra
Further complicating the issue is the announcement that the US Government will hold hearings on Libra in July. Representatives have called upon Facebook to halt their project’s development until the hearings can be held. There is no word yet from Facebook upon whether they will honor the request.
A concern that has been expressed by some lawmakers is that the Libra token could be ripe for exploitation by terrorists and other disruptive shadow groups. This may be an outgrowth of anger that some hold toward Facebook for its role in the Russian meddling in the 2016 US elections. It has been concluded by a special counsel that Russia used troll farms to make posts on social media in an effort to influence the election’s outcome. While this and the Libra project are in no way connected, a distrust of Facebook and Zuckerberg is still present in Washington.
In the wake of these developments many want to know if Libra will have a positive or a negative impact on cryptocurrency across the board.
Possible Market Scenarios Are Hard to Guess
The volatility of cryptocurrency markets in general makes market prediction a very difficult task. Even the experts have a hard time guessing where the market is headed. This is proven by the wild swings taken by Bitcoin in the summer of 2019, leaving speculators to wonder if Bitcoin is about to enter a bull market or remain bullish.
There is a chance that Libra’s introduction could send other tokens spiraling. Interest may be driven to the new token at the expense of Bitcoin and others. It is also possible that Libra could spark more interest in cryptocurrency worldwide among those who have yet to become involved with digital tokens. More interest could cause values to spike across the board.
Only one thing is for certain. Libra is going to happen. Until it does there will be much news to watch in the world of crypto.