What does Clark Howard think about Facebook’s new Libra cryptocurrency?

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If you go back just six months ago, we were having to ration calls to our show from people wanting to talk to me about cryptocurrency. It was all the rage in the fall of last year and into the winter and then, suddenly, the calls just stopped.

The reason is, it became a mania. There were all these ICOs (initial coin offerings), and they were all the children of Bitcoin — not related to Bitcoin itself, but the idea of it.

What happened was, roughly 6 months ago, Bitcoin hit around $18,000 per Bitcoin. Bitcoin is a made-up money that is not issued by any government or anything like that, and it’s surrounded by secrecy.

Since it hit $18,000 per coin, it dropped around three months ago to around $3,000 and change. Today, it’s trading at about $9,000. Hmm, what could be wrong with that???

How Facebook’s Libra coin is different from other cryptocurrencies like Bitcoin

The idea of cryptocurrency came out of the thought that people no longer trusted government money — that governments are running these big budget deficits all around the world  — and that if you created these coins, it got you away from government. It also allowed people involved in criminal activities to be able to hide and launder money.

So, it’s always been an area that had a certain shadow cast over it, but the big problem is that real money does not change in value dramatically over short periods of time, in most cases.

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If you take something like Bitcoin or any of the others, they go up and down and up and down like a roller coaster that will leave you sick to your stomach after you were completely elated on the way up. That’s not real.

Something that’s real is something that you can have in your pocket and know what it’s pretty much going to be worth day after day after day.

In my mind, even if someone calls me and says “I’ve made a fortune in such-and-such cryptocurrency,” I don’t care — because how many stores take it? How many bills do you have that you can pay? And how efficient is it to convert it into that money money you despise — real money — that you used to pay for it?

The underlying idea of it — the way the electronic ledger is kept — is an idea that a lot of people involved in monetary theory are very interested in and excited by. Now there’s a new, completely establishment kind of consortium led by Facebook that Visa, Mastercard and PayPal are part of (along with many other companies) in a cryptocurrency called Libra.

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Libra is based on the value of real money, actual currencies around the world, and will get approval from regulators in every state in the United States and whatever countries they want to go to before they launch.

As to whether Libra will work or not as an alternative payment system, I don’t know, but this is about the promise of it. Let’s say you’re a small business and you’re buying goods for your business elsewhere around the world. Right now, your bank eats you alive when you’re paying for whatever goods you’re buying with these ripoff fees that you have to pay to take your dollars and convert them into the currency of whatever country you’re buying those goods in.

The idea of Libra is that you wouldn’t have to worry about that. There would be no bankers take, which, interestingly enough, is why no banks are involved in this consortium.

As for you and me as everyday consumers, I’m not clear yet how this really fits in our lives unless you travel internationally. But this is much more of the promise of what a cryptocurrency should be than any of the malarkey that’s gone on over these years with other cryptocurrencies.

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