It is easy to imagine how this can evolve into a social credit system in which undesirables and delinquents can be denied access to their accounts. However, this does not mean that it will fail. As a means of electronic micro-payments, the Libra is likely to become the cheapest service provider. People will use it as a convenient and cheap alternative to credit cards and PayPal.
The privacy issue is only a problem when it comes to large cash holdings, but very few will store a significant portion of their savings in Libra. For the purpose of storing value, people buy assets such as real-estate, shares and gold.
The purpose of currency is to be a means of payment and a unit of account. For this to work, it requires short term price stability and convenience. Both are attributes of the Libra. Money, on the other hand is a form of capital. Money is a long term store of value that can also act as currency.
There is no competition between the Libra and gold. For privacy and as a store of value, gold is unrivaled, and as long as the Libra remains just one of many alternatives, there is no real danger associated with its lack of privacy. The Libra and its competitors, such as Visa and PayPal, will be used in electronic transactions whenever privacy is of little or no concern.
When privacy is an issue, nothing beats face to face transactions involving cash, gold or silver, so it is only in cases where there is a need for secret electronic transfers that Bitcoin and other crypto-currencies will be of practical use. The question then remains whether that segment of the transaction industry is correctly valued at its current level of hundreds of billions of dollars.
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