Part I: Facebook’s Libra ≋ What happened?
- 5 minute read
On June 18 2019, the crypto-community was taken by storm with the announcement of Libra. A new digital currency that was going to be developed by the social media behemoth Facebook Inc. Introducing themselves as the new global payment system, Libra quickly took all the headlines. According to experts, this was going to push cryptocurrency into the mainstream-territory. Today, almost a year after the announcement, Libra has faced enormous amounts of backlash, criticism and extreme regulatory pressure while the project hasn't even launched yet. So what happened? In today's article, we will recap what the last twelve months have thought us.
A new global payment system
Facebook released its official whitepaper on the 18th of June and stated that they were going to release their own stablecoin with the name Libra. The token would be backed by financial assets (multiple cryptocurrencies) to give it intrinsic value and was backed by US Treasury securities to avoid extreme volatile fluctuations. Operating on their own native and scalable blockchain, the stablecoin would be governed by The Libra Association. An association that has Mastercard, Paypal, Uber and Coinbase as its founding members. What could possibly go wrong?
Where the announcement had an immediate positive effect on numerous crypto prices, it didn't take long before Libra faced a lot of backlash. After all, Facebook doesn't really have the best reputation when it comes to personal information and the protection of privacy. Now they want to implement a new economic infrastructure on top of that? Many questions were raised which can be seen in the following timeline:
- JULY 2019: International regulators, central bankers and politicians were quickly raising their doubts on the entire project, citing money laundering and the finance of terrorism as their main concerns.
- JULY 2019: David Marcus, Libra's project leader, is invited to Capitol Hill on Washington USA. During this meeting, David Marcus is scrutinized for two whole days as the motivations of Facebook Inc. are questioned.
- AUGUST 2019: Afraid that Libra would promote 'anti-competitive behavior', the European Commission probed the digital currency with antitrust regulators. Saying that the coin in its current form will never be accepted without strict rules and regulations.
- OCTOBER 2019: Creator of Facebook, Mark Zuckerberg must testify before the American congress answering questions regarding Facebook's data-sharing scandal.
So, what happens next?
Does that mean that the Libra coin is dead on arrival? Not exactly, although it took some tempering of the expectations. David Marcus (Libra's project leader) admitted that the coin's initial plan was a bit too ambitious. Most attempts to temper expectations have come from the same, Mr Marcus. For example, in November 2019 he stated that Facebook, Whatsapp and Libra would not share data, confirming that the companies can be seen as separate entities. All was calm and quiet, until this week when The Libra Association finally broke their silence and published a new press release. In this press release, the company states that their wallet will be rebranded from Calibra to Novi and that consumers will be required to verify themselves with government-issued ID's. This implies that Libra has a complete KYC (Know your customer) procedure, backpaddling from their prior statements. It would seem that all the harsh criticism has caused Libra to re-think their initial plans and we for one, can't wait to see what they will do next!
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