Can Libra survive?

These are testing times for Facebook Libra. Mark Zuckerberg has been busy defending plans to launch his own digital currency, speaking before House Financial Services Committee in the same month the project was dealt significant blows with the news that Mastercard, Visa, eBay and PayPal were among the high-profile partners to have pulled out of the Libra Association.

Lee Hills, CEO of blockchain regulatory specialists SolutionsHub.im, asks whether Facebook Libra can survive these setbacks

If nothing else, Mark Zuckerberg has a proven track record of sticking to his guns and riding out storms to see things through. Of course, it helps when you’ve got the money and resources to throw at it. 

It’s clearly a significant setback - one of the main issues any cryptocurrency faces at the moment is trust. Many people are dubious about crypto and even though Facebook is a brand with gravitas, its reputation is hardly whiter than white. Therefore, the link between trusted payment providers was really important from an integrity point of view. So, yes, it’s a big blow.

Reality bytes

Of course, unlike a decentralised cryptocurrency, Libra is far more susceptible to real-world pressures and with so many of the companies and individuals involved in the Association being US-based, they cannot simply disregard the threat of action against them, which limits the potential to ‘act first and ask permission later’ as is often the case with new sectors. 

We will find out more about the US authorities’ approach to tackling Libra on October 23, when Facebook CEO Mark Zuckerberg testifies before the US House Financial Services Committee at a hearing entitled “An Examination of Facebook and Its Impact on the Financial Services and Housing Sectors.”

Inspiration for others?

It’s possible other organisations could try such a move - banks, for example - but not with the same pace of the potential launch of Libra. At the moment, the banks feel threatened by blockchain technology, although many are openly engaging with it. Banks understand that if blockchain proves to be the future, as many hope believe it will be, then banks who don’t act now will be left behind.

If Libra is allowed to proceed unrestricted, the advantages to developing countries could be enormous; the first usable cryptocurrency that allows near instant, low cost, borderless transfer of value. As a common standard, it would allow small suppliers to access markets, prompting meteoric growth.