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Cyber Bitcoin
On June 29, China People's Daily published an article about Facebook's Libra. Let's see how the official Chinese media look at this "Global Coin".

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Image courtesy of Zilian8.com

First, the article points out that Libra is a digital currency and uses blockchain technology for peer-to-peer trading:

To understand the characteristics of Libra, you first need to understand the digital currency and blockchain. This involves many technical problems such as mathematics, cryptography, and computer programming. We can skip these technical problems, use the "first-principles" thinking method, and use basic principles to think about complex phenomena. We can simply understand the blockchain as a shared ledger shared by all participants, which can realize the immutability of the transaction information, the trace of the whole process, and traceability; while the digital currency is based on a set of encryption based on the underlying application of the blockchain. The algorithm is actually the transaction medium on the blockchain. With the blockchain, the shared ledger and the digital currency, the buyer and the seller can implement a “peer-to-peer transaction” without a third party on the blockchain, thereby enabling decentralized smart contracts and execution mechanisms.

The shortcomings of Bitcoin (which is also an advantage from another perspective) is that "there is no sovereign institution endorsing its value, which causes the price of Bitcoin to be easily speculated and fluctuates greatly."

Libra is "governed by an independent Libra association" and its value is "backed by asset reserves":

For each newly created Libra cryptocurrency, there is a basket of bank deposits and short-term government bonds of relative value in the Libra Reserve to build trust in their intrinsic value.

The article points out that "Facebook is trying to treat digital currency and blockchain separately, using offline asset endorsement to solve Libra's currency fluctuations, while still using blockchain to achieve "decentralized" peer-to-peer trading and smart contracts. Obviously, Facebook wants to break the application bottleneck of digital currency through this method."

However, at the beginning of Facebook's Libra release, it has caused international financial regulators to close:

International regulators, the Financial Stability Board and the UK Financial Service Authority, have stated that they will not allow the world's largest social network to launch its planned digital currency without critical scrutiny. At the same time, the US Senate and the House of Representatives will also hold hearings on the digital currency proposed by Facebook. The governor of the Bank of England said that to treat Libra, you should open your brain instead of opening the door.

The article mentioned that Facebook itself is not enough for users' privacy protection, and it also causes everyone to worry:

Just three years ago, Facebook was caught in a data breach scandal related to the US election. Facebook’s reputation has been poor in terms of user data and privacy protection.

And the most important thing is that "Facebook publishing Libra may reduce the monetary sovereignty of developing countries."

If a country's citizens use Libra extensively for commercial transactions and cross-border payments, it will seriously reduce the status of the country's fiat currency, while intervening in the country's ability to govern its financial system and implement normal monetary policy.

Everyone should pay attention to one of the key points of Facebook's launch of Libra, which is to simplify cross-border payments. In countries with foreign exchange controls, it is believed that Libra will not easily get permission from regulators.

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