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The other side of the Coin: Risks of the Libra Blockchain

Author

Listed:
  • Louis Abraham

    (X - École polytechnique)

  • Dominique Guegan

    (UP1 - Université Paris 1 Panthéon-Sorbonne, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, University of Ca’ Foscari [Venice, Italy])

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 risk, 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.

Suggested Citation

  • Louis Abraham & Dominique Guegan, 2019. "The other side of the Coin: Risks of the Libra Blockchain," Post-Print halshs-02325808, HAL.
    • Handle: RePEc:hal:journl:halshs-02325808
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-02325808
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    References listed on IDEAS

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    1. Bullmann, Dirk & Klemm, Jonas & Pinna, Andrea, 2019. "In search for stability in crypto-assets: are stablecoins the solution?," Occasional Paper Series 230, European Central Bank.
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    3. Dominique Guegan, 2018. "The Digital World: II – Alternatives to the Bitcoin Blockchain?," Post-Print halshs-01832002, HAL.
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    10. Dominique Guegan, 2018. "The Digital World: II – Alternatives to the Bitcoin Blockchain?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01832002, HAL.
    11. Dominique Guegan, 2018. "The Digital World: II - Alternatives to the Bitcoin Blockchain," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01906522, HAL.
    12. Dominique Guégan, 2018. "The Digital World: II - Alternatives to the Bitcoin Blockchain?," Documents de travail du Centre d'Economie de la Sorbonne 18016, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
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    Cited by:

    1. Julien Chevallier & Dominique Guégan & Stéphane Goutte, 2021. "Is It Possible to Forecast the Price of Bitcoin?," Forecasting, MDPI, vol. 3(2), pages 1-44, May.
    2. Anastasia Melachrinos & Christian Pfister, 2020. "Stablecoins: A Brave New World?," Working papers 757, Banque de France.
    3. Helder Miguel Correia Virtuoso Sebastião & Paulo José Osório Rupino Da Cunha & Pedro Manuel Cortesão Godinho, 2021. "Cryptocurrencies and blockchain. Overview and future perspectives," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 21(3), pages 305-342.

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    More about this item

    Keywords

    Risk; Regulation; Libra; Blockchain Protocol; Centrel Bank Digital Currency; Cryptocurrency; Governance;
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