Facebook has announced that it aims to launch a digital currency, Libra, which will be available to users worldwide. Given Facebook's place in the lives of more than 2 billion people, that ambition must be taken seriously. While Libra makes sense — it could give millions of people access to e-commerce and reduce the price of money transfers — it also poses real concerns and dangers. National and global regulators must study this proposal closely and, if they approve it, ensure that Facebook transforms its business practices to protect the privacy of its users and national security. The company's record inspires little confidence on either count.
Libra, a "global, digitally native, reserve-backed cryptocurrency built on the foundation of blockchain technology," is expected to go live within a year. The blockchain ledger, which records transactions and vouchsafes the system, will be operated by a network of validator nodes, and the entire structure will be overseen by Founding Members of the Libra Association, each of which will have made an initial investment of at least $10 million.
Significantly, Libra will be backed by a basket of real-world currencies and assets, which is supposed to make its value more stable and will distinguish it from virtually all other cryptocurrencies, whose value is purely speculative. Facebook has said that it will make the currency even more stable by investing in those currencies via a reserve fund and profits from those investments will be returned to investors in the Libra Foundation.