Libra Is Bound To Be Dead On Arrival
With great power comes great responsibility, something that Facebook lacks.
After Mark Zuckerberg was forced to testify before the Senate on Facebook’s rising data privacy issue, we got a confirmation that large corporations are still on a leash. Although not tight, we now know that reaching a boring corporate dystopia won’t happen that easy.
During the past year, rumors about Facebook’s possible involvement filled the crypto and blockchain space. Even though such an event would have a positive impact, legitimizing the industry even further, it is quite ironic to see ‘Big Brother’ fiddling with decentralized technology. What would a tech giant who is known to censor, sell and misuse private data have to do with a technology meant to prevent those issues? How would Satoshi react?
On June 18, 2019, the rumors turned out to be true; Facebook announced Libra. Backed by an association of 28 members, including Visa, Mastercard, PayPal, Coinbase, and others, Libra is set out to be a stablecoin. While on first glance, Facebook’s ambitions seem to be a global payment system, others commented that the tech giant aims to become a bank.
The truth is that Libra will become neither. It would be an impossible mission for Facebook to introduce a truly global payment system.
Take a look at PayPal. As a serious two-decade-old online payment system, it still hasn’t reached some markets due to a lack of regulatory compliance. In some countries like Egypt and Serbia, PayPal was first introduced around 2013. The problem is, even though the service Is available for years, PayPal still isn’t fully adopted by banks in those countries. Around two years ago, when I started freelancing, I spent days searching for a bank that allowed clients to withdraw money from their PayPal account.
Due to recent controversies, Facebook would be even more limited when it comes to cooperating with banks and following regulations. While Libra is advertised to allow people from all parts of the world to send money to each other, the question remains whether Libra will even be implemented in the western part of the world.
Only a month passed since the official announcement, and several entities and individuals have already shown their stance against Facebook’s crypto project. From US representatives calling for an antitrust investigation, and ECB executives calling for fast regulatory action, to even President Donald Trump’s recently declared opposition against it.
Only a few days away before Libra’s hearing before the Senate Banking Committee, a document surfaced which escalates the issue even further. A drafted bill dubbed “Keep Big Tech out of Finance” describes the need to prevent tech corporations from becoming even bigger. A part of it reads:
“A large platform utility may not establish, maintain, or operate a digital asset that is intended to be widely used as medium of exchange, unit of account, store of value, or any other similar function, as defined by the Board of Governors of the Federal Reserve System.”
The alleged bill remains to be unconfirmed, but such an idea doesn’t seem too far-fetched. With the path Facebook is currently taking, it doesn’t seem that the tech giant will launch Libra in its current form, if at all. It seems that Facebook and Google can continue their data selling a business as long as they don’t disturb the economic system too much.
If Libra launches successfully, I doubt that notable adoption will take place if data privacy awareness continues to rise. After all, how different is Libra from current payment processors and will it really adopt blockchain technology? It might as well be a pseudo-blockchain version of PayPal.
