Facebook recently shocked the world by announcing plans for a new cryptocurrency. Tech fans and young persons seem enamored with the idea of social media-oriented cryptocurrency. Facebook appears to believe it can rival Bitcoin for cryptocurrency dominance. Skeptics do abound. Some detractors sit in powerful government seats. That means Facebook could face tremendous regulatory hurdles with launching its new vision for digital money.
In less than one day, regulators put forth concerns and opposition to Facebook’s plans. Considering the volatile nature of cryptocurrency trading, few should feel surprised that regulators aren’t fond of a new one entering the global market.
Congressional officials in the United States noted the plans present a worrisome expansion of Facebook’s power. The company might not find many allies in the European Union, either. Cryptocurrency does represent a threat to government-backed currencies. After all, the governments can’t control the “virtual printing” of cryptocurrency nor curtail its impact on treasury-backed money.
Would-be buyers of Facebook or other forms of cryptocurrency might find the lack of regulation comes with severe drawbacks. Any money put in a cryptocurrency wallet lacks insurance protection. With a traditional bank, deposits are federally insured. When someone hacks into a cryptocurrency wallet, the money is gone forever.
And then there are other things to take into consideration with the venture. The considerations center on worries about Facebook’s business practices.
Facebook’s newer endeavors all occur under the dark shadow of the company’s recent privacy scandal. The suspicion remains cast over Facebook’s ability to protect and preserve data confidentiality. The arrival of a new cryptocurrency would provide Facebook with more access to privileged information. In this case, the data would contain financial records and more. The company won’t have an easy time convincing skeptics another disastrous and illegal scandal won’t break out. Too much distrust with Facebook has set in amongst members of the public.
Facebook doesn’t plan on developing cryptocurrency by itself. A strategic partner intends to help the social media giant with its plans. Switzerland’s Libra Association is working with Facebook to bring the digital currency to the global market. Other potential partners in the venture include Uber, Via, PayPal, and more.
Management at Facebook likely anticipated pushback against the cryptocurrency plans. The company probably won’t abandon the project unless a firestorm erupts. So, look for the cryptocurrency to arrive sometime in the future.
Dil Bole Oberoi
