Mark Zuckerberg is still pushing for the creation of Libra, but it's obviously futile for him at this point. He knows we don't trust Facebook.

Facebook has a dismal record in terms of privacy. Comedians and satirists everywhere need to read the data and privacy section on the fb.com site. It’s worth noting that this section is only active since early 2019 while the technology and other articles have posts dating back to 2011. It seems privacy was never really a consideration, doesn’t it? Posts from September all have “Privacy Matters” to start the headline…matters to who is my question, not to them, certainly.

If you’ve read my previous article on Libra, you’d have to guess that I’m not in favor of it, and I outlined my reasons, Facebook’s ‘involvement’ (Look, we’re not leading it) being the primary reason. They couldn’t keep my fetish for forcing buffalo to watch reality TV a secret, so why would I trust them to handle my finances?

If you eliminate Facebook from the Libra idea, it’s a different ballgame. Of course, that’s not enough to entice me to embrace the idea as it stands.

Core Values

Libra was promoted as a good social initiative to bring the unbanked into the marketplace, allowing them to use digital wallets in a manner we’re used to in the developed world, with signup requiring nothing more than a smartphone and identity verification. I’m all for that. It’s a good idea, right? Can we take this at face value? I don’t think so, and neither do Mastercard, Visa, eBay and Stripe (former partners who walked away from Libra). The best thing Facebook could do at this point is to drop it altogether. Rebranding does nothing to improve perception; we are not fooled.

Why Reinvent The Wheel?

Since you can’t copyright an idea, I’d like to see another company, one with respect for user and data privacy, take up the reins and roll it out properly. Why not Mozilla, Microsoft or Apple?

Instead of Libra, why not call it “Not A Cynical Approach To Expand Markets” or simply “Improved Banking System?”

The overall idea is sound enough, but why not set it up properly. Libra, as a concept, could work but barriers to adoption must be identified and resolved before development work takes place.

Possible barriers to a global cryptocurrency include but are not limited to:

• Adoption levels – Needs to be seen as viable solutions by users, banks, and businesses.
• Banking and financial regulations – buy-in from banks and national governments is essential.
• Criminal activities – Identity verification and handling of related data according to privacy regulations is essential
• Implementation of permission-based decentralization for transactions – a core feature of blockchain, eliminated by Libra, where processing is controlled by partners, one of whom cannot be trusted.
• Use of blockchain – calling Libra a blockchain is like calling Facebook a privacy advocate.
• Founder member selection – apart from the charities needed to connect with the target market, all the relevant parties were missing from Libra. Big Tech, banks, real academic institutions, security pros, and privacy advocates were all conspicuous by their absence.
• A level of data privacy afforded for financial transactions.

If these barriers are not resolved, why waste time continuing with it?

So Much For Customer Satisfaction

The creation of a whole new physical infrastructure, as proposed by Libra, with ATMs, etc., is nothing short of BS but does indicate awareness of the vital issue. Universal adoption (and not just at user level) is necessary for a global currency (any type of money) to work. Otherwise, you need to ensure users can get their hands on cold hard cash immediately, regardless of location.

If users want real flexibility with their finances, they need a variety of accounts to satisfy the payment options offered by modern businesses. Some will accept PayPal; others favor Stripe, Payoneer or a myriad of others. None are banks.

In all cases, a bank account is needed for withdrawal (or to set up the account in the first place), or else you are restricted to dealing with companies that accept that payment method. Coincidentally, all of these providers have forums packed with user complaints relating to ‘suspicious activity’, ‘frozen funds’, and other issues, acting like banks but without the official designation.

If banks got their act together, there would be no need for payment gateways. Unfortunately, the banking industry resisted change, and even today, many core legacy banking platforms are outdated, leaving them unable to compete with agile fintech startups and a myriad of payment gateways that reduce and sometimes eliminate transfer fees.

The key is to merge the digital world and real-world in a practical manner, without the need for intermediaries, payment gateways and wallet providers. In my opinion, it’s the central banks that need to drive innovation, with fintech partners to aid with implementation where required.

If the EU can eliminate cross-border banking charges for member countries, it seems to indicate unnecessary fees in the past? After all, money is moving digitally, not as if a courier is involved. Look at China, their central bank will launch a digital equivalent of the yuan and is predicted to aid global use of the currency. Cue fanfare as other countries follow their lead (after Tunisia)?

Finally, If nothing else, the Libra attempt at a global currency highlights the issues surrounding such an initiative and is unlikely to succeed. Mark Zuckerberg said, “We are not going to launch anything that is a product or a part of this (Libra) until we have full support from U.S. regulators regardless of what the international regulators say.”

While I’m not an economist, China’s move on digital currency is interesting in its problem-free implementation when the central bank is involved. Sweden’s central bank is also considering the e-krona, a digital equivalent of their currency. They are not alone. Perhaps, it’s possible to achieve the same promoted goals as Libra without a global currency or loss of privacy?