Why is Facebook Libra a bad idea? 3 reasons why everyone is abandoning it
Crypto

Why is Facebook Libra a bad idea? 3 reasons why everyone is abandoning it

By Amelia Tomasicchio - 4 Oct 2019

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Libra is now clearly seen as a bad idea. But why? And why are all the companies that had given their support to the association now abandoning the Facebook project?

A few days ago, the Wall Street Journal reported that MasterCard that VISA would be considering abandoning Libra and today, it is the turn of PayPal that, according to the Financial Times, could soon withdraw its support of the Facebook stablecoin.

In fact, according to the Financial Times, PayPal was the only company of the original 28 Libra supporters not to attend the meeting held today in Washington.

It is worth mentioning that David Marcus, Vice President of Messenger and co-founder of Libra, comes from PayPal, of which he was President until 2014.

In any case, why is Libra being seen as a bad idea now and why are companies like PayPal giving up on it?

Reason 1: too much attention from regulators

Being part of such an eagerly awaited project with so many implications in terms of privacy and security attracts far too much attention, and not just that of the media, which can also be negative.

In fact, all the regulators in the world have their lights pointed not only at Libra but at all the companies that support it.

And so, over the past few days, the US Treasury Department has sent letters to the companies involved in the project, asking them to provide anti-money laundering compliance programs and how Libra will adapt to them.

Reason 2: Trump and cryptocurrencies

Recently, in a speech given by Mark Zuckerberg during an internal Facebook meeting, the founder turned against Elizabeth Warren, a candidate for the American Presidency. Warren, in fact, advocates for the need to contain the expansion and influence of large technology companies such as Facebook and Libra.

This could cause Zuckerberg to favour the re-election of Trump which, however, has always been against crypto or other currencies that could hinder the power of the US dollar.

As a result, also Trump might see Libra in a bad light and oppose it. And he would certainly not be an easy enemy.

Reason 3: the omnipotence of Facebook and privacy

Libra could have access to all the data available to Facebook, thus potentially having an unlimited number of people as users.

And how would privacy be affected? Not only has Facebook already had problems with the security of its users’ data – see the Cambridge Analytica scandal just a year ago – but now it would also have much more power and more data on the consumption and purchasing power of its users.

This could certainly be beneficial for the companies in the network, but less so for the social and legal implications, which leads to the first point: too much attention from regulators.

This reason makes Libra a bad idea, not only for the companies that are part of it but also for the community.

 

Amelia Tomasicchio
Amelia Tomasicchio

As expert in digital marketing, Amelia began working in the fintech sector in 2014 after writing her thesis on Bitcoin technology. Previously author for Cointelegraph and CMO at Eido. She is now the co-founder and editor-in-chief of The Cryptonomist.

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