Just half a year ago, the ambitious cryptocurrency project Facebook – Libra – shone in the light of positive prospects and financial opportunities for all interested parties. The situation has changed radically. The project was not only left by PayPal, Visa, Mastercard, eBay, Stripe and Mercado Pago, the US Congress criticized the Congress completely, but also the director of the second giant Twitter network, Jack Dorsey, spoke out negatively.
He commented that Libra had nothing to do with cryptocurrency at all, and during Murk Zuckerberg’s speech to the U.S. House of Representatives, there was a focus on American consumers, not the global audience that underlies his network. Mark Zuckerberg, although he did not respond to Dorsey's comment, said he would leave the Libra Association if the project was not approved by regulators. But he also emphasized that this organization is independent and can independently promote the project.
Libra – death or salvation of the global financial industry
In the summer of 2019, an active Facebook user base amounted to 2.41 billion people around the world. If you also take into account users of Instagram and WhatsApp, owned by Mark Zuckerberg, the number of possible Libra customers exceeds the population of even such densely populated countries as India or China. The head of the Libra Association himself positions this as a great opportunity for millions of people to pay with a stable blockchain tied to a basket of the most widely used fiat currencies like the US dollar, Japanese yen, euro, Singapore dollar and British pound.
After all, with the help of Libra, users will be able to send money to each other, pay for goods and services within Facebook services. However, the authorities have a completely different view of the launch of stableblokoin, fearing the negative consequences. According to US congressmen, a private company that has become a gigantic financial institution can compete with entire countries. If we add to this the negative reputation of the Zuckerberg network regarding the storage and use of users' personal data, as well as the threat of money laundering and terrorist financing, it becomes clear why regulators are literally from all corners of the world categorically opposed to launching Libra.
Cryptocurrency way of Twitter
In 2009, the founder of Twitter launched another technology giant, Square, to receive and process electronic payments from credit cards via a smartphone or tablet. As of 2014, the company processed 446 million payments with 144 million cards totaling $23.8 billion. In 2017, Square added the ability for users of their mobile app Cash App to purchase, sell and transfer bitcoins to other wallets. This winter, Jack Dorsey, after holding a Lightning Torch charity event, announced that he will definitely implement the Lightning Network second-level bitcoin protocol in his Cash App. It is worth noting that the action was held to demonstrate the capabilities of the Lightning Network, which aims to solve two main problems of the Bitcoin blockchain: lower cryptocurrency transfer fees and speed up transaction time.
Some time later, the founder of two technological unicorns purchased a Lightning node from Casa, and introduced Tippin service on Twitter for micro payments by Lightning Network. In addition, this summer, Square introduced Bitcoin deposits into the CashApp application. Obviously, Jack Dorsey's cryptocurrency payment solutions do not provide for the creation of his own cryptocurrency, but are aimed at improving and improving the existing one, to which he is fully committed – Bitcoin.
The beliefs of Jack Dorsey against the wishes of Mark Zuckerberg
Jack Dorsey, unlike Mark Zuckerberg, is not aimed at creating his own cryptocurrency, but is implementing projects around bitcoin. He has repeatedly stated that it is her who sees the future native currency of the Internet. In a podcast to Joe Rogan, he said this:
“I am convinced that the Internet will have a native currency. I assume that Bitcoin may become one, given the trials through which it passed, as well as the principles on which it is built. He was born on the Internet, developed on the Internet and passed the test on the Internet.”
At one of the events in New York, Jack Dorsey also commented on Mark Zuckerberg's speech to the US Congress:
“Libra is not based on an open standard, born on the Internet, but out of the personal intentions of the company, which does not correspond to either what I personally believe in or what I want our company to uphold.”
He also said that much of what the founder of Libra said was based on American traditions, and this concept could make it impossible to experiment and expand on Twitter, “serving a global audience.” In the end, Jack Dorsey said that he was not considering the possibility of joining Libra, and the project itself did not consider cryptocurrency at all.
Meanwhile, Mark Zuckerberg has a different vision for the cryptocurrency future and its prospects. In his opinion, Libra will be stable, unlike bitcoin, as it will be provided with a basket of fiat currencies. In addition, he believes that now "people pay too high a price for transactions and have to wait too long to complete them," and Libra will allow transfers and payments to be made safely and quickly for everyone who does not use bank accounts for various reasons. For now, Facebook’s CEO’s arguments have been strongly rejected by global governments.
During a sensational speech by Mark Zuckerberg before the US House of Presidents, congressmen asked why key companies such as PayPal, Visa, Mastercard and eBay left the project. To which the head of Facebook replied that it was “a risky project that is undergoing scrutiny.” From previous information it is known that it was Senators Brian Schatz and Sherrod Brown who threatened these companies with "close attention not only to payment transactions with Libra, but to everyone else." Mark Zuckerberg left his position by saying that he wants to provide quick and affordable payments for those who, for various reasons, do not have bank accounts.
What Congressman Brad Sherman stated:
"You, the richest man in the world, come here and hide behind the poorest people in the world. And say that you are trying to help them. In fact, you are trying to help those for whom the dollar is not a good currency: for drug dealers and those who shy away from paying taxes."
Members of Congress also pointed out to Mark Zuckerberg all previous Facebook failures. To which he recognized the existence of many shortcomings in recent years and the fact that “many people would like this idea to be proposed by anyone else, but not Facebook.”
At the same time, the platform director assured that he would support the launch of Libra only if all permissions were received from financial regulators. To which they, in turn, asked, “how will Facebook behave if the majority of partners' votes are in favor of launching Libra without the appropriate permissions?”. Facebook CEO replied that he would quit the Libra Association in that case and would be forced to leave the project.
We can clearly see on the example of CEO Twitter that it is not necessary to create your own cryptocurrency in order to bring technological innovation to the real world. At the same time, it is obvious that megaprojects such as Libra Facebook bring a huge amount of difficulties to their implementation. Whether this will turn out to be a useful means of payment for peaceful users or an ideal weapon for terrorists, apparently, remains an open question, not only for Mark Zuckerberg himself, but also for all state authorities.
And despite the fact that in connection with the latest events, it is rather difficult to predict how events around Mark Zuckerberg’s stablecoin will develop, we can confidently say that such a large-scale decision will have a significant impact not only on the entire cryptocurrency industry, but also on the entire global financial market . One can only expect whether the Libra Association will come to a positive consensus with the US government and other countries, or whether they will start to launch the project on their own, despite all the bans.
Editor: Alyona Deryabina