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Facebook Libra will raise awareness of cryptocurrency, but how safe is it?

Facebook has announced its own cryptocurrency, Libra. The social media platform intends to operate its own digital wallet for people to spend the currency, known as the Calibra Wallet, which will be available in WhatsApp, Facebook Messenger and as a standalone app.

Libra will enable users to send money to each other at low to no cost, and Facebook intends to eventually open the Calibra Wallet up to additional services, so that people can pay for public transport, bills and more.

It has enlisted 28 firms, including Spotify and Uber, who have each invested a minimum of £8 million to be a founding member of the Libra Association, an independent not-for-profit membership organisation.

Despite Facebook explaining that the collaborative approach to cryptocurrency will “ease volatility concerns of existing blockchains and cryptocurrencies”, a number of industry experts and lawmakers have expressed their concerns.

A chairwoman of the House Financial Services Committee, has urged Facebook to wait until the US Congress has examined the project.

“Given the company’s troubled past, I am requesting that Facebook agree to a moratorium on any movement forward on developing a crypto-currency until Congress and regulators have the opportunity to examine these issues and take action,” said Democratic congresswoman Maxine Waters.

Meanwhile, US Senator Sherrod Brown, who sits on the Senate Banking Committee, said he thought Facebook had become “too big and too powerful,” according to the BBC.

“We cannot allow Facebook to run a risky new crypto-currency out of a Swiss bank account without oversight.”

Closer to home, David Emm, principal security researcher at Kaspersky, has outlined his thoughts on the Facebook news and offered up key recommendations on the safe use of cryptocurrencies.

“Facebook has announced its plans to launch its own digital currency based on blockchain, Libra, by 2020, but the reality is, many users are still unsure about using cryptocurrency, or even what cryptocurrency is. In fact, just 1 in 10 of us fully understanding how they work, and only 19% have ever purchased any cryptocurrency at all, according to our latest report,” said Emm.

“Everyone feels comfortable going into any branch of a bricks and mortar bank, as they know they are regulated and underwritten, and most of us make use of the bank’s online facilities. However, I would argue that the trust stems from the trust we have in them in the real world. I don’t think we have the same level of confidence with an online equivalent – whether that’s a currency exchange that holds our digital money for us, or our own digital wallet. If crypto-currencies are to rival real-world currencies, we all need to have the same level of trust.

“This move by Facebook will certainly raise the awareness of such currencies, but what is unclear is what implications, good or bad this will have on the security and trustworthiness of crypto-currencies, which aren’t centrally controlled or underwritten by nation-states. Who will regulate how Facebook uses those currencies, and the information that they are party to as a result of their usage? These things need to be addressed upfront, so that the security of such currencies and their user’s data isn’t an afterthought. Facebook has come under a lot of pressure recently, and rightly so, for how it uses data entrusted to it. So, it is understandable and perhaps a good thing that people will be dubious of Libra until Facebook can put the appropriate assurances in place,” he added.

“There are however things that all cryptocurrency providers can do to increase trust – by securing their online facilities and transactions. Equally, consumers need to understand the steps that they can take to prevent cybercriminals from robbing them of their digital assets. They don’t need to know the workings of crypto-currencies, but they do need to understand how to stay safe.”

Here are some key recommendations on the safe use of cryptocurrencies from Kaspersky:
– Always verifying a web wallet’s address and not following links to an online bank or web wallet
– Using cryptocurrency hardware wallets
– Double-checking recipient addresses, the amount being sent, and the size of the associated fee before sending a transaction
– Writing down a mnemonic phrase that allows you to recover a crypto wallet if you lose it or forget your password
– Installing high-quality security solution, such as Kaspersky Internet Security, to safeguard the devices you use to access crypto wallets and trade on crypto-exchanges.

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