Bad times for Libra. No, we are not starting a horoscope section on Linux Addicts. We are referring to Facebook's attempt to create its own cryptocurrency.
Facebook's Libra project added a new setback on Friday when four payment processors; Stripe, Visa, Mastercard and Mercado Pago withdrew from participation in the Libra Association, the Geneva-based group created by the company to develop the virtual currency. Later that day eBay joined. Paypal had done it at the beginning of October.
Bad times for Libra. A possible explanation
Why so many dropouts on the same day? The Libra Association held its first official meeting on Monday the 14th. At that meeting, members were asked to make binding commitments to the project.
When the company introduced Libra earlier this year, it said that hoped to increase the number of project participants from 27 companies to more than 100 by the time the Libra network launches in 2020. Instead, the number of members of the association has been reduced to 22 companies.
But it is not only bad that he has lost limbs. The worst is which are the members that left.
Almost all payment processing companies who originally signed up for Libra have dropped out (the only exception so far is the Netherlands-based payments company PayU, which has expressed interest in continuing the project). The usefulness of a cryptocurrency is directly proportional to the possibility of using it. And, without these payment platforms, this utility is drastically reduced. Furthermore, all of these companies are used to dealing with financial transaction regulators, and could have given Facebook a hand in a field in which it has no experience.
Facebook crossed a boundary
The feeling experts have is that Facebook took a bigger step than it could. Politicians have no problems as long as it is to commercialize the private data of the users or spread the odd false news. But, messing with the issuance of currencies (even if they are digital) is something that they will not tolerate. One thing is Bitcoin, which never went beyond being a marginal medium of exchange. But Facebook tIt has an economic power equal to that of many countries, and a number of users greater than many in number of inhabitants.
Sharing control of the issuance and manipulation of the exchange rate with a corporation is something that governments are not willing to accept.
The Stripe Director made a letter public that he received from two United States senators.
We are writing to share our deep concerns about Facebook's Libra cryptocurrency project and the formation of the Libra Association. We are worried because Key unanswered questions remain about the risks the project poses for consumers, regulated financial markets, capital markets. and the global financial system.
We urge you to carefully consider how your company will manage these risks before continuing to participateGiven that Facebook has yet to prove to Congress, financial regulators, and perhaps not even your company, that it is taking these risks seriously.
The Facebook project enthusiasts don't like it too much either from other cryptocurrency projects.
The great advantage of projects like Bitcoin and Ethereum is the decentralized architecture of your networks. They like the idea of a financial system that is outside the control of a single organization.
The Libra network, as Facebook dreams of it, will be completely under the control of a single private group: the Libra Association. For cryptocurrency supporters, this represents a step backwards. It makes no sense to have the technical advantages of blockchain with the heavy regulatory burden that the law imposes on conventional payment networks.