Since June 18, 2019 the crypto world has changed forever. After Facebook announced, in collaboration with around twenty world-class companies, the future launch of its own virtual currency, Libra, which came to challenge fiat money worldwide. But after facing innumerable problems and delays: Is the Facebook Pound project still on track?
The origin of Facebook Libra
Only with great difficulty could a project like Facebook’s Libra have been born in a country other than the United States. Well, for most of the world, the fact that it is governments that issue money, is a truth internalized by several generations. However, Mark Zuckerberg and his company were not satisfied with this reality, and decided to challenge it with a different approach to Bitcoin.
Thus, on June 18, 2019 the future launch of Libra was announced. A virtual currency based on Blockchain, but developed and supported by around twenty companies gathered in the Libra Association. Who would be responsible for ensuring its development, operation and implementation worldwide.
The original plan of Facebook and its allied companies was to launch a virtual currency backed by a basket of different currencies such as the US dollar and the euro. What would guarantee the value of Pound over time, avoiding volatility that affects cryptocurrencies like Bitcoin.
In this way, Facebook hoped to provide an alternative to people around the world who are not banked. And, therefore, they do not have access to all the benefits of being part of the global financial system. However, almost immediately after announcing the launch of Libra, the project began to face significant challenges.
State resistance to the Facebook project
And it is that, for world governments such as the United States, the Chinese or the French, it is one thing to confront and tolerate Bitcoin. A cryptocurrency in its early stages of development, and powered solely by a community of committed, but geographically dispersed citizens. So they represent, at best, a threat for the medium term.
But another totally different thing is to face the financial muscle of a company like Facebook. Which proposes in Libra an alternative to the monopoly that governments exercise over the world monetary system. And, therefore, on the monetary policy of each of their countries. Making this project a much more immediate challenge than that represented by Bitcoin.
For this reason, as soon as Facebook announced Libra’s exit to the market in the near future, most of the world’s governments opposed the social network’s projects head-on. Whether it was initiating parliamentary investigations as in the case of the United States. Denying that they were going to allow the use of Libra as it happened in France. Or even speeding up the launch of their own government virtual currency, just like the Chinese government did.
These attacks against the currency led to the departure of several of the most important companies in the Libra Association, including Mastercard and Paypal. Which preferred not to confront their governments over the Facebook project. Doubting the possibility that it could go ahead.
The current state of Libra
Probably for a company other than Facebook, an obstacle as big as the almost unanimous hostility of the main governments on the planet. It would have led to the project being scrapped immediately, wiping out hopes of a virtual currency independent of states.
However, this has not been the route chosen by Facebook and the companies that remain in the Libra Association. On the contrary, Facebook has begun to rethink the project, which is still underway, to make it more passable for governments. Showing that you do not really want to threaten the right of States to issue their own money. Nor manipulate a virtual world currency at your convenience.
For this, it has carried out a series of modifications in the new Facebook white paper on Libra, published in April this year. In which new elements are added, including the admission of the supervision of organisms such as the central banks of the countries, and the International Monetary Fund:
“To limit concerns about the unilateral change of the ≋LBR exchange, the Association welcomes the supervision and control of the composition of the basket (…) by a group of regulators and central banks or an international organization (for example, the IMF) under the direction of the Association’s main supervisory authority, the Swiss Financial Market Supervisory Authority (FINMA)“
Where is Libra going?
Therefore, we can see a clear trend towards self-limitation as the project continues. Aiming to get the go-ahead from the regulatory authorities of the main countries of the world. To work even if it is done losing the autonomy that at first seemed to want to have.
Thus, news such as changing the name of the Libra wallet from Calibra to Novi would be part of this effort. Decreasing the suspicion of governments about a single wallet and easily manipulated by Facebook. To open the doors to the development of multiple wallets from different sources to store the virtual currency.
At the same time, Binance’s nods to the project also indicate that conversations between the exchange and the Libra Association since last year could come to fruition.
So while there is no official information as of yet, we can expect the Changpeng Zhao exchange to be one of the first to trade with Facebook’s Libra once it goes on the market. Probably, along with Coinbase that, one of the members of the Libra Association.
Still, there are many unanswered questions: What will Facebook’s Libra value be? Who will be the new members of the Libra Association to reach the target number of 100 companies and NGOs? When will the coin be released? And what governments will accept it? Therefore, only time can finish clarifying the panorama in which Libra is currently and where it is heading.