Unsurprisingly, there’s a lot of strange news developing around Facebook’s Libra project. The announcement of OpenLibra left a lot of us scratching our heads with more questions than answers. Then, some of Libra’s biggest partners like Visa, Mastercard, Paypal and Ebay announced that they are separating themselves from the project. And they all left around the same time.
The timing is not coincidental. The Libra Association is scheduled to hold their first conference tomorrow where members will be asked to make binding commitments to the project. The payment processors that left the association could have helped Libra navigate the complex legal landscape and help legitimize the project. On the other side of the coin, these payment processors have a lot to lose if Libra went mainstream since they make their money by skimming a certain percentage of all transactions funneled through them.
Should We Want Libra?
Mounting pressure from regulatory agencies is the biggest threat to Libra. Then they have the problem of adoption. A handful of countries have already vocalized their distaste for Libra. And most crypto-users today view Libra as a step backward due to its centralized control. However, a lot of other people who don’t have bank accounts stand to benefit from it. It’s difficult to determine if it would have a net-positive or negative affect on humanity. More than a billion people already use Facebook’s products. The problem is placating the governments of those people so they are able to use it.
Due to the fractured support of Libra, another group has sprung up called OpenLibra. Their motto is, “An open platform for financial inclusion. Not run by Facebook.” They plan on launching a permissionless fork of Libra. This means that anyone can join the network, similar to Bitcoin, and start getting rewarded for their participation and start building on top of the network. OpenLibra was announced at Ethereum Foundation’s Devcon 5 conference in Osaka, Japan last week. This was around the same time that some of Libra’s biggest partners decided to remove themselves from the project.
OpenLibra will be pegged to the Libra token which is a shift from most of the other pegged cryptocurrencies. Most are either pegged to a basket of currencies or assets, or a single fiat currency. OpenLibra also caught some flak for misrepresenting organizations that were involved in the project. There’s a lot of speculation going on surrounding both projects. Libra certainly has an uphill battle to fight but they have the resources to fight to the bitter end. We’re seeing a legitimate attempt at a corporate takeover of our government’s control on money. I think most of us realize that a financial overhaul is inevitable, but at what cost will this come?