The Other Side of the Coin: Risks of the Libra Blockchain

36 Pages Posted: 24 Oct 2019

See all articles by Louis Abraham

Louis Abraham

University of Paris-Saclay - Ecole Polytechnique

Dominique Guegan

Université Paris I Panthéon-Sorbonne

Date Written: October 16, 2019

Abstract

Libra was presented as a cryptocurrency on June 18, 2019 by Facebook. On the same day, Facebook announced plans for Calibra, a subsidiary in charge of the development of an electronic wallet and financial services. In view of the primary risk of sovereignty posed by the creation of Libra, the Central Banks quickly took very clear positions against the project and adressed a lot of questions to the responsible of the project focusing on regulation aspects and national sovereignty. The purpose of this paper is to provide a holistic analysis of the project to encompass several aspects of its implementation and the issues it raises. We address a set of questions that are part of the cryptocurrency environment and blockchain technology that supports the Libra project. We identify the main risks considering at the same time: political risks, financial risks, economical risks, technological risks and ethics focusing on the governance of the project based on two levels: one for the Association and the other for the Libra Blockchain. We emphazise the difficulty to regulate such a project as soon as it will depend on several countries whose legislations are very different. The future of this kind of project is discussed through the emergence of the Central Bank Digital Currencies.

Keywords: Blockchain Protocol, Central Bank Digital Currency, Cryptocurrency, Governance, Libra, Regulation, Risk

JEL Classification: C88, E5, G28, K2

Suggested Citation

Abraham, Louis and Guegan, Dominique, The Other Side of the Coin: Risks of the Libra Blockchain (October 16, 2019). University Ca' Foscari of Venice, Dept. of Economics Research Paper Series No. 30/WP/2019 . Available at SSRN: https://ssrn.com/abstract=3474237 or http://dx.doi.org/10.2139/ssrn.3474237

Louis Abraham

University of Paris-Saclay - Ecole Polytechnique ( email )

55 Avenue de Paris
Versailles, 78000
France

Dominique Guegan (Contact Author)

Université Paris I Panthéon-Sorbonne ( email )

106 avenue de lhopital
75634 Paris Cedex 13
Paris, IL
France

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