Reference no: EM134031755

Question

The zodiac sign for someone born from late September to late October theoretically reflects someone who is well-balanced and strives for equilibrium. Represented by a scale, Facebook's intent for its cryptocurrency is well represented by using the same name-Libra. Libra is a digital currency to build the bridge between currencies all over the world. With fewer fees, protected personal information, and a resource that even the millions of people without bank accounts can access, it seemed too good to be true. How could anyone make a stable worldwide currency in a way that is virtually unaffected by inflation or deflation of specific government currencies? Originally scheduled to launch in 2020, the press for Libra has been immense. Critics have argued that owning an entire currency like this is too much power for one company, and others say Libra will eventually fall flat on its face. Supporters declare, however, that this cryptocurrency will change the world. The leading Democrat on the Senate Banking Committee, Representative Sherrod Brown, posted on her Twitter (see Figure 6.11), "Facebook is already too big and too powerful, and it has used that power to exploit users' data without protecting their privacy. We cannot allow Facebook to run a risky new cryptocurrency out of a Swiss bank account without oversight." Her mention of Facebook's rough past in user privacy is a huge factor for many. In 2018, people's trust in Facebook was weakened when the company was found secretly selling users' data to companies like Spotify, Netflix, and Microsoft. This is not the first time Facebook's ethics with privacy have been questioned, and many protest that it is not safe for a company with this major flaw to be controlling a major currency across the world. An illustration posted by s 1 l v e r b o x at 6:43 A M on June 19, 2019 is captioned, Take that world ellipsis hash tag b t c hash tag Libra, and shows a man dragging a wooden horse on wheels, while a few others welcome it into the fortress. The people are captioned, Regular People. The horse resembles the Trojan Horse and is labeled, Facebook LIBRA. Within the horse's belly there are soldiers with spears and shields. The shields are illustrated as bitcoins. The door of the fortress is labeled, The market. The post has been liked by 11 people. A comment on the right written by Bruno Skvorc at 10:23 A M on June 18, 2019 reads, No one will call it hash tag Libra, Everyone is going to call them Zucks. Gimme 50 Zucks. The comment has been liked by 46 people. FIGURE 6.11 Facebook's virtual currency, called the Libra, faces many questions. Should a company be able to create its own currency? What should its name be? People seem to be torn, however, about the actual concept of Libra's impact. Some argue that it is not so much Facebook that's the issue, but the idea of Libra in the first place. Meltem Demirors, the Chief Strategy Officer at CoinShare said, "My issue is, Facebook has chosen to style this as a 'cryptocurrency'. [This] has led media and lawmakers to say what they're doing is just like bitcoin and should be treated similarly, and it's fundamentally not." While others suggest that the pros could heavily outweigh the cons. David Ely, from San Diego University, commented on one of Libra's main goals. "Many individuals, especially in developing countries, have limited or no access to banks. Libra has the potential to make financial services more accessible to these individuals. Along with a means to transact with merchants, Libra could become a low-cost way to transfer funds internationally and a stable store of value in countries with volatile currencies." So are the risks worth the potential benefits or is it a disaster from the start? Facebook's head of blockchain subsidiary, David Marcus' response to skeptics and supporters is this, "We will have to make very strong commitments so that people trust us, and we will have to honor those commitments for a very long period of time to earn people's trust." While Mark Zuckerberg promised that Facebook would do everything they could to help build an innovation that people would be happy with, both in ethics and in practice. "We are trying to provide a safe and stable and well-regulated product, so that's always been the strategy and we'll continue to engage here." With Facebook's pledge to a higher system of currency and the world having a collision of opinions-what will become of Libra?

Case Discussion Questions Will Libra be the next bitcoin? Libra launched in 2020. How has it performed so far? How do you predict it will perform in the future? Is Facebook foolish to take on a task like this with the reputation they have? Why or why not?