Following a rousing presentation from David Marcus – the head of Facebook’s Libra – Coinbase CEO Brian Armstrong has come out in support of the developing cryptocurrency.
Libra is often depicted as a pretty divisive and maligned project. It’s not shocking to think that a cryptocurrency with plans of financial domination – emanating from a company with a checkered past of privacy problems – has regulators and citizens up in arms. Nonetheless, Libra now has at least one supporter, Coinbase’s CEO Brain Armstrong.
On Wednesday, Armstrong tweeted out a message of support for Libra, calling it “one of several important crypto projects;” adding that he doesn’t understand why it gets such a bad wrap.
What’s the Big Deal?
Ironically, it’s reasonably misguided of Armstrong to not see where the backlash originates from. Facebook’s attempt at subverting the financial industry comes mere months after the U.S. Federal Trade Commission (FTC) slapped the firm with a $5 billion fine for breaching privacy standards. Within a statement on the issue, FTC Chairman, Joe Simons, noted:
“Despite repeated promises to its billions of users worldwide that they could control how their personal information is shared, Facebook undermined consumers’ choices.”
The penalties came following the Cambridge Analytica (CA) scandal, which saw the appropriation of up to 87 million Facebook users’ data. While CA was technically the malfeasant, the very fact that Facebook had such an exploitable loophole in its platform confers a blatant breach of trust.
Moreover, for many crypto enthusiasts, Libra itself represents an ideological antithesis; it’s centrally controlled, linked intrinsically to the financial industry, and governed by an un-elected group of major businesses… what’s not to like?
Libra is a ‘Game Changer’
As Armstrong noted, Libra’s head, David Marcus, recently published a blog detailing the various motivations behind Libra. The post delves into the existing protocols and legacy systems within the financial industry, essentially making a case for their replacement.
“The existing “money networks” are closed and are not well interconnected,” says Marcus, adding:
Some of these systems were built in the 1960s and 70s, and while they’ve received upgrades since then, they often live on top of legacy, fragmented infrastructure.”
Unsurprisingly, Marcus highlights the crux behind the philosophy of the cryptocurrency industry; noting that redundant banking intermediaries limit reach, and efficiency, while increasing costs dramatically.
He then illustrates the transaction flow between two members of the Libra Association, explaining that the process streamlines the current method used in traditional bank transfers, concluding:
“Long story short, building on top of existing rails and across disconnected payment networks won’t reduce cost, open up the market to more innovation, nor lower the barrier of access to modern financial services as much as building a new infrastructure with a very stable, high quality global medium of exchange supporting it.”
Nearly every crypto aficionado in the world would agree that a new financial system is warranted, but whether Facebook is suitable to provide that new protocol remains to be seen. The lack of trust demonstrated by the company has severed a significant amount of user trust. In fact, a recent survey undertaken by ING THINK, revealed this shortage in faith, unveiling that 66% of Europeans would refuse to use a digital currency, like Libra, to transact across social media.
With statistics like that, it doesn’t look like Facebook will replace the financial system any time soon. At least they have Armstrong on their side…