Why every Libra member's mutiny hurts Facebook – TechCrunch

There is a strategic charge for the abduction of Visa, Stripe, eBay and more from the Facebook-led cryptocurrency Libra Association. They are not just names that drop off the list. Each potential made Libra more useful, ubiquitous or recognized. Now they can become obstacles to the symbol's launch or growth.

For fear of regulators' inquiries, not just about their Libra involvement, but the rest of their business, these companies are pulling out at least for now. No one had given exact commitments to integrate Libra into their products, and they said they could still get involved later. But their exit clouds the future of the project, leaving Facebook to absorb more of the blowback.

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Here is what each of the impending Libra Association members brought to the table and how they could raise new challenges for cryptocurrency:

Visa With one of the most accepted payment methods, Visa could have helped make Libra universal to use. It is also one of the most prestigious names in finance, and lends deep credibility to the project. Visa's departure leaves Libra that looks more like technology companies that handle payments, provides the security of going fast, breaking things that can lead to financial ruin if Weight gets in trouble. It can also leave the weight with a much weaker presence in brick-and-mortar stores. No one wants to own a cryptocurrency that does not value and cannot easily be used.


The commitment of MasterCard together with Visa made Libra look like sitting adaptations to modern technologies. This made it less threatening and gave the cryptocurrency an inevitable air. MasterCard would also have brought an even wider network of places where Libra could one day be used for payment. Now MasterCard and Visa can actively work against Vågen to prevent their payment methods from becoming outdated by Vågen and eliminating transaction fees through blockchain. Two of the biggest allies of Libras could be the biggest enemies.


Facebook has repeatedly told regulators that the Calibra app and Messenger and WhatsApp integrations would not be the only Libra wallets, pointing to PayPal . Facebook Head of Libra David Marcus told Congress when asked about the social network's oversized power to leverage Libra through its own Calibra wallet that "you have companies like PayPal and others who obviously want to partner, but [also] compete with us" . Now, Facebook does not have a scaled payment method it does not own to point to as a likely alternative for people who would not trust Facebook's Calibra, Messenger or WhatsApp to be their Weight. The Libra Association also loses PayPal's huge network of online merchants who accept it, as well as the way of integration into its repayment app Venmo. PayPal convinced the mainstream public to trust electronic payments – the exact kind of trust Facebook desperately needs. The fact that Marcus was also the former president of PayPal, but could not keep it in the union, raises concerns about the group's ability to build coalition.


Stripes huge popularity of e-commerce merchants made it a valuable Libra Association member. Together with PayPal, Stripe facilitates a large portion of online transactions outside of China. The easy integration made it a top choice for developers that Facebook certainly hoped to build on Vågen. Stripe's exit destroys a critical bridge to the fintech startup ecosystem that could have helped institutionalize Weight. Now the association has to work on designing payment widgets from scratch with no help from Stripe, which could slow down adoption if it is ever launched.

There is a clear reason why all these payment processors have received bail. Senators Brian Schatz (D-HI) and Sherrod Brown (D-OH) wrote a letter to Visa, MasterCard and Stripe CEOs this week explaining that “If you address this, you can expect a high level of scrutiny from regulators , not just about Libra related activities, but about all payment activities. ”


As one of the longest-standing e-commerce companies, eBay strengthened the belief that Weight could be used to conduct transactions between troubled strangers without a costly middleman. It may also have carried the emphasis on one of the best Western online marketplaces outside of Amazon. Without destinations like eBay aboard, average netizens will have fewer opportunities to be exposed to the potential of Libra to eliminate transaction fees.

Mercado Pago

Mercado Pago is one of the lesser-known Libra Association members, helping merchants receive payment via email or in installments. The idea of ​​connecting economically underserved populations has been at the heart of Facebook's pitch for why Vågen should exist. The Libra Association has been light on the details of how it serves this demographic, and relies on the inclusion of partners like Mercado Pago to help it figure this out later. Mercado Pago's departure leaves the Weight that looks more like an economic power grab than a tool to help the disadvantaged.

Who's Left?

On Monday, the remaining Libra Association members meet to complete the original membership list, select a board, and create a charter to manage the project. This forced the hands of the companies above, who had their last chance to leave this week before being dragged deeper into Libra.

  Facebook Currency Hearing

USA – July 16: David Marcus, head of Facebook's digital wallet service in Calibra, prepares to testify during Senate Banking, Housing and City Committee hearing on "Investigation of Facebook's proposed digital currency, and privacy considerations "Tuesday, July 16, 2019. (Photo by Bill Clark / CQ Roll Call)

Who has left include venture capital firms, mutual funds, nonprofits and cryptocurrency companies. They are less tied up with the status quo for payment processing, and therefore had less to lose. The blockchain-specific companies probably hoped to backlash economic giants like Visa to gain weight and create more legitimacy for their industry as a whole.

These partners could help fund an ecosystem of Libra developers, create daily use cases, spread the system in developing countries, and push for alliances between Libra and cryptocurrency players. Facebook will have to fight to keep them on board if it wants to avoid that Libra looks like a one-sided disruption of the economy.

For Libra to actually launch, Facebook must make serious concessions and deviate from its original vision. Otherwise, if regulators continue to mind, more members may flee. One alternative moved by Libra Association member Andreessen Horowitz & # 39; a16z crypto partner Chris Dixon was that Libra should be denominated in US dollars instead of a basket of international currencies. This may reduce the fear that Libra intends to compete directly with the dollar.

It has become clear that Facebook will not get its ideal cryptocurrency out the door. This is the trademark fee of 100 scandals coming back to bite into it. Now, the best it can hope to get is even a watered down version, prove it can actually help the underbanked, and then hope to convince regulators that it is well-meaning.

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