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Facebook’s Libra has the downside of volatility without the upside of investment, claims ex-Coinbase CTO




Libra won't be the last major technology venture into cryptocurrency, more to come claims ex-Coinbase CTO
Source: Unsplash

Primed as the “next big thing” in the intersection of the payments and technology industry, Facebook’s foray into the cryptospace took the market by storm, following its unveiling on June 18. As more and more layers of Project Libra are peeled off, the more positive does it look for the social media giant, with many in the cryptocurrency industry suggesting that this success will not be isolated to just Facebook.

Among the many soothsayers in the cryptocurrency world is the ex-CTO of American cryptocurrency exchange, Coinbase, Balaji Srinivasan. Facebook’s crypto and blockchain attempt will be fruitful for the Menlo Park giant, and by no means will this be the last entry of a major technology player into the digital assets’ realm, stated the former Coinbase executive.

Agreeing with the larger consensus within the decentralised currency community that Libra will be a “bullish” for Bitcoin, Srinivasan dismissed the cautionary tale, stating that there is no “threat” to the king coin. His tweet read,

Srinivasan added that Libra is a clear indication that the “licensing overhead” that previously impeded several payment networks has “unofficially been eliminated.” Following this introduction, traditional networks will experience significant “downward pressure” on their “interchange fees.”

Calling the Libra project a possible “Visa/MC competitor,” Srinivasan opined that this venture highlights the importance of the nature of private and public blockchains. He attested to Libra’s blockchain being firmly in the camp of a ‘public permissioned chain,’ rather than a private network. Srinivasan said,

A key aspect of Facebook’s cryptocurrency which he wasn’t sure the larger public understood clearly, was the backing. Libra is backed not by a single fiat currency like Tether, but rather a basket of fiat currencies which runs the risk of volatility due to exchange fluctuation.

Srinivasan opined that a remedy for the above could be re-configuring the backing of Libra from a basket of cryptocurrencies to a one-for-one dollar backing, or by making a ‘True USD stablecoin on chain.’

On the stablecoin topic, he tweeted,

It should be noted that Srinivasan’s former employer, Coinbase, is part of the highly touted “Libra Consortium” which touts the likes of Visa, MasterCard, PayPal, Uber, among others.

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