Facebook's digital currency Libra appears to be falling apart as major players leave before commitment deadline

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Visa, Mastercard, Stripe, and eBay all withdrew from the Libra Association on Friday following PayPal's resignation last week. The Libra Association is scheduled to hold it's first meeting on Monday and it's members will be asked to make serious commitments in that meeting. It appears that the largest payment processors were not willing to make any commitments.

Libra will to be a Facebook-controlled digital currency pegged against a basket of fiat currencies. Some blogs controlled by multinational corporations have called it a "cryptocurrency" but it's not really; Libra will not be any mining or blockchain security like Bitcoin.

A global digital currency similar to the Special drawing rights (SDR) currency controlled by the Monetary Fund (IMF) sounded interesting when Libra was announced back in June 2019. Huge players like Visa, Mastercard, PayPal and Stripe backing it made it sound viable. Those are gone along with any hope of having "more than 100" companies backing Libra by the time it launches in 2020. Some smaller companies such as Sportify and Netherlands-based payment processor PayU remain part of the association which currently lists 22 smaller companies as members.

Taking on the IMF, The World Bank and the Federal Reserve

The obvious question is why, why did these companies initially sign up and suddenly decide to drop Libra like a hot potato? The not really a whitepaper "The Libra Reserve" may give those who occasionally read sites like ZeroHedge a clue:

"What are the actual assets that will be backing each Libra coin? The actual assets will be a collection of low-volatility assets, including bank deposits and government securities in currencies from stable and reputable central banks. As the value of Libra will be effectively linked to a basket of fiat currencies, from the point of view of any specific currency, there will be fluctuations in the value of Libra. The makeup of the reserve is designed to mitigate the likelihood and severity of these fluctuations, particularly in the negative direction (i.e., even in economic crises). To that end, the above basket has been structured with capital preservation and liquidity in mind. On the capital preservation point, the association will only invest in debt from stable governments with low default probability that are unlikely to experience high inflation.[https://libra.org/en-US/wp-content/uploads/sites/23/2019/06/TheLibraReserve_en_US.pdf "The Libra Reserve" design document"

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Facebook is essentially trying to take on the IMF, the World Bank and the Federal Reserve with a global super-currency controlled by them. Saddam Hussein tried to sell oil for Euros and was swiftly removed. Libya's Muammar Gaddafi announced that he would sell oil for gold and the result was a complete destruction of that country. Creating alternatives which could threaten the USDs global dominance is not popular. Exactly what made Visa, Mastercard, Stripe, and eBay withdraw from the Libra association is anyone's guess. One guess would be that someone put pressure on them.

Libra will not be free software, nor will it be a very safe to use

CryptoCurrencies like Bitcoin are based on free open source software. Their blockchain-based approach ensures that nobody, except for a majority of miners working in concert, can prevent you from sending or receiving payments - and even miners working in concert would have a hard time doing so. The exchanges needed to convert cryptocurrencies to fiat are obviously a week-spot.

Libra will not be free software; it is unlikely that there will be any client-side software for it at all. It will simply be something you could use on Facebook's websites and websites they partner with. One controversial post on Facebook can get you banned. It does not have to be very political and it does not have to be obvious that it is somehow controversial, a bad joke of some kind is enough. It must also be noted that Facebook goes out of their way to investigate their users on other websites which means that some bad joke written 5 years ago on some obscure website in a dark corner of the Internet can get you kicked off Facebook. Is that the kind of platform one should entrust with larger amounts of funds?

Libra falling apart is probably a good thing.