Facebook Should Abandon Its Crypto Plans, and Here’s Why
When Facebook announced its own cryptocurrency in June this year, the excitement was palpable. Being the biggest social media platform, with 2.5 billion users, it was a big endorsement to cryptos. We all expected Libra to be fully functional by the end of the year. However, it has not played out as Mark Zuckerberg, or anyone else expected.
Libra is a stablecoin that will be backed by a basket of sovereign currencies. The crypto will be governed by the Libra Association, a body that’s composed of payment processors, tech giants and financial behemoths.
Facebook had already indicated some of the areas it would target first, including remittance. Specifically, the Menlo Park, California-based company would target Asia, with India as a prime market. Reports indicated that Facebook would enable Libra payments through WhatsApp.
However, it has been rocky, to say the least for Facebook.
At the back of his mind, I’m certain that Zuckerberg expected some opposition. And I’m also certain that he had in place the measures to fight back. After all, he has faced opposition with Facebook and yet he has always come out on top.
However, he couldn’t have anticipated just how much opposition he would be up against. The authorities have been the most vehement in their attack of Libra. American legislators have opposed the crypto as they feel it would challenge the U.S dollar. And they are right about that. After all, it would be easier and cheaper to use. It would also target even the marginalized across the globe. Facebook’s 2.5 billion users also make it a formidable opponent.
European legislators also jumped on the anti-Libra bandwagon, even more viciously than their American counterparts. France made it clear that it would not allow the use of Libra, even calling on other European powers to follow suit. Germany and England also voiced concerns, fearing that Facebook would have too much power.
Even African and Latin American countries joined in, opposing Libra
Time to Quit?
Facebook has done the crypto industry a lot of good, giving it a wider audience and forcing governments to consider crypto regulation. In June, shortly after the Libra announcement, the price of BTC surpassed the $11,000 mark for the first time in 15 months. The effect was real.
However, it’s becoming increasingly clear that Libra is dead in the water even before it launches. While the Libra Association is to be based in Europe, the region is fiercely opposed to it. The three biggest economies — France, Germany and England — lead the anti-Libra movement. Their influence on the other nations is huge and Libra will have a hard time finding friendly regulators.
With Facebook being American, it could bring the Libra Association to the country. However, Congress is also anti-Libra. The U.S is out to protect its interests, and Libra directly goes against them.
How about Asia? Well, it’s not any better here either. China is already developing its own state-backed digital currency. In fact, China kicked its crypto plans into high gear when Facebook announced Libra. This is because, with Facebook being American, China fears the dollar will take a bigger hold of the global economy.
While I believe that Facebook should abandon Libra plans, I don’t think it should turn its back on crypto. It should instead integrate existing cryptocurrencies. I know this sounds like a fool’s errand, but I have my reasons.
For one, most of these cryptos are allowed in most countries. In Europe for instance, an EU directive will allow banks to hold digital currencies beginning next year. That opens up a huge market for Facebook, allowing it to offer its users access to these currencies and transact using its infrastructure.
By integrating other cryptos, Facebook will also reach a wider audience. BTC maximalists will be catered for; the Bitcoin SV community will find a platform that accommodates them; Ethereum and all the ERC-20 tokens will be included; and so will BCH, LTC, XRP, ADA…….you name them.
Such a move will also take away the custodial burden that Libra would have brought with it. Facebook would have been liable for the storage of Libra on the Calibra wallet, partially at least. With these other cryptos, the users would integrate third-party storage options. This eliminates Facebook’s liability.
We will have to wait and see what transpires next. However, should Zuckerberg decide to soldier on with Libra, I believe he will regret it in the end.
(All images courtesy of Pixabay.com)