The launch of Libra has definitely stirred the traditional financial sector. Some experts are already suggesting that it “could clean out your wallet.”
A bit of mystery here and there spices up one’s life. But the latest piece from CNBC called “How Facebook’s Libra could lead you to clean out your wallet” is perhaps a bit too mystifying.
According to the article, Libra is not really an advantage for the consumers. It is, in fact, a threat. Why? Apparently, it can make you overspend dramatically because it is easy to access. The article invokes the results of Charles Schwab’s 2019 Modern Wealth Survey which says that social media tops the list of sources triggering “bad” spending.
To showcase the dangers of Libra, CNBC turns to Tyrone Ross Jr., an investment advisor specializing in cryptocurrency in Woodbridge, New Jersey. And Bruce McClary, vice president of communications for the National Foundation for Credit Counseling.
“Libra could make it easy to overspend because it will be easy to access,” said Ross. McClary echoed his stance, “For a number of users, that ease of access for a tool that can be used for purchases and retail consumer activity could be dangerous, especially for those who already have a difficult time keeping control of their budget.”
The article then provides some advice on how to deal with the threats. These include sticking to your budget and logging out of online stores.
What was this all about?
In the same article, CNBC states that “officials at Facebook did not respond to requests for comment.”
Quite frankly, this is not surprising at all because the question is — what is there to respond to?
Libra is a stablecoin (at least that’s how it is envisaged). Before using it, you’ll essentially have to buy it. Yes, with that very same credit card that allows you to buy things on Amazon.com. Or with cash, which means that you’ll have a very good understanding of how many banknotes you are inserting inside the machine.
So, is there something about Libra that is innately different compared to PayPal, Apple Pay or maybe even Western Union? So far, doesn’t look like it except that the payment fees are likely to be lower.
Now, don’t get me wrong. Like with any other asset, it is easy to lose track of your purchases and overspend. And to some extent, Libra — at least in the beginning — may give the impression of easy money. Hence it is worth to run the numbers from time to time to make sure that you’re not exceeding your budget. Yet, saying that it could clean out your wallet feels like a bizarre attempt to lambast the digital asset sector and the clear advantages that it has to offer, including the banking the unbanked endeavor.
That said, here are some other things that could clean out your wallet. And leave you homeless too (that’s a bonus):
- Subprime mortgages;
- Limitless credit cards;
- Investment advice from a person who makes sure to say, “this is not investment advice.”
On a final note, there are definitely some things about Libra that are truly worrisome. One of them is whether FB will really be able to resist the temptation not to capitalize on its ad policy.
However, claiming that the coin will wipe out all your savings just because it’s a digital asset and not a credit card, for example, is truly bewildering.