[co-author: Daniel Baum - Articling Student]

The year was 2017. The holidays were approaching and the popular focus on cryptocurrencies—particularly Bitcoin—was becoming more intense in each passing news cycle. But it was not to last. On December 17, 2017, Bitcoin climbed to a price of US$19,783. By December 22, the price had slipped to US$13,800. On February 5, 2017, it plummeted to US$6,200. Today, it hovers around US$8,080.

Since that dramatic plunge, cryptocurrencies have mostly left the headlines. This week, however, they will be returning.

On October 23, Mark Zuckerberg of Facebook will appear before the U.S. Congress to discuss Facebook's launch of Libra, a cryptocurrency it proposes to launch through an affiliated foundation. Libra's proclaimed mission is to be a "simple global currency and financial infrastructure that empowers billions of people."

What Makes Libra Different than Bitcoin?

Libra has two main features that may allow it to become a truly global currency: 1) it is backed by a reserve of assets, and 2) it is governed by the independent Libra Association.

Because Libra is backed by a reserve of real, liquid assets, Libra holders can convert their digital currency into fiat currency. This backing creates extrinsic value for Libra—increasing its likelihood to be used as an actual currency. The average consumer relies on currency to transfer value only when the value is relatively stable. In countries whose currencies have been ravaged by hyperinflation—such as Venezuela, whose Bolivar appreciated by around 10 million percent since 2018 according to the International Monetary Fund—Libra may have particular appeal.

How is Libra Organized?

Unlike Bitcoin's decentralized nature, Libra will be centralized at launch. The Libra Association, initially made up of 28 companies ranging from Uber to Andreessen Horowitz, will regulate and scale Libra during its development. Each company has pledged $10 million to fund the Libra reserve.

In recent weeks, however, the Libra Association has been losing members. On October 4, PayPal became the first company to drop out. Visa, Mastercard, Stripe, Mercado Pago and eBay followed. This left the Association with no major U.S. payment processors. On October 14, Booking.com dropped out. Later that day, the remaining 21 organizations formally joined the Libra Association, signing a charter and appointing a board of directors.

Government Perspectives

In July, the U.S. Congress sent a letter to Facebook asking it to delay launching Libra until after a congressional interrogation of CEO Mark Zuckerberg. Zuckerberg will testify on October 23 in front of the House Financial Services Committee.

In September, France's finance minister, Bruno Le Maire, pledged to block "the development of Libra on European soil" until significant concerns were addressed. Germany seconded France's statement. India, which has significantly restricted cryptocurrencies, could be next to officially block Libra.

Circle October 23. The future of Libra—and cryptocurrency for the masses—might hang in the balance of Zuckerberg's testimony. Libra is likely cryptocurrency's best chance to become mainstream.

With over 2 billion users, Facebook has unprecedented reach for a corporation—in some respects, larger than many governments. Libra has the possibility of moving Facebook beyond a social network, towards a global economic vehicle.

Privacy and Security Issues

Libra raises privacy and security concerns. 2019 has been the year of government regulators enforcing large fines against corporations for data breaches and privacy violations. Significant questions in this area remain to be addressed, and no doubt Mr. Zuckerberg will be asked about some of them by members of Congress.

What Next?

We know how Libra is different than any other cryptocurrencies before it.

We know that we do not know what impact Libra will have on the global monetary system.

And we do not know what we do not know. Which, surely, is much more than we know.

Libra could change the future of banking as we know it. Or it could be just another cryptocurrency—hype, chatter, and back to business.

Tune in October 23 for Libra's Congressional hurdle. It could be the first of many.