Facebook's Libra was officially revealed the other day and government officials have already announced that they want Facebook's venture into cryptocurrency investigated, regulated, or a little bit of both, but its potential success does not have historical precedent.
France's Finance Minister, Bruno Le Maire, said "[i]t is out of question [that the Libra] become a sovereign currency", and that "It can’t and it must not happen". He then asked the Group of Seven central bank governors to prepare a report on the Libra evaluating its risks around privacy, money laundering and terrorism finance for their next meeting in July. Markus Ferber, a German member of the European Parliament is afraid that Facebook will become a "shadow bank" and that regulators need to watch it closely. The U.S. politician, Maxine Waters, wants Facebook to pause its cryptocurrency endeavors calling for Facebook to "agree to a moratorium on any movement forward on developing a cryptocurrency until Congress and regulators have the opportunity to examine these issues and take action".
Further, Bank of England Governor, Mark Carney, said "[a]nything that works in this world will become instantly systemic and will have to be subject to the highest standards off regulation". Nevertheless, Carney is not as harsh as other officials since he believes "we need to have an open mind". However, the worry about the coin may be early since there is already historical precedent that Facebook's unfamiliar venture could fail despite the hype around the project.
Historical precedent of corporate technology
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align=right] Facebook's venture into cryptocurrency might be unique for this particular technology, but it certainly is not the first time a company tried to venture into an exciting field that was not its primary business. Ryan Taylor, CEO of Dash Core Group and as someone who work in the payments sector for years, discussed how something similar has happened before with Walmart and payment systems and its destiny for failure despite its initial hype of success.https://twitter.com/RTaylor05/status/1140998048631287808
- RTaylor05
"The retailers all joined MCX just so that they had access to information. They had no desire to actually implement it. But they also couldn't afford to be the only retailer not privy to MCX's plans. MCX insisted that member retailers couldn't accept other smartphone payments." ... "Back to Libra... DO YOU REALLY THINK VISA WANTS TO DISRUPT ITS CASH COW??? Hell no. They are joining Libra to disrupt it, delay it, have visibility into their plans. PayPal? Mastercard? Stripe? Vodafone? Facebook? They all have different objectives, needs, and customer profiles."Ryan went on to mention that "[t]here are endless examples of consortiums of competitors that form in the payments industry" just to serve their own needs and that "[t]he only time they work is on a small scale where all the players involved have a shared goal" such as "the bank wire system in Australia (where there are basically only four banks)". Ryan added that this Libra project is also destined for failure due to Facebook's lack of payments experience, but overall, it will help bring attention to the cryptocurrency payments industry.
"Add to the mix that Facebook's main business is social media. Libra is a side hustle for them in an industry they don't understand. When things start to get difficult (regulators, member infighting, etc) they will readily abandon their involvement. Same with the other members. Bottom line is that I've seen this (bad) movie before. So have you, but you probably don't remember them. This one has all the hallmarks of a failure that will cost a lot of money along the way. The positive? It will bring a lot of attention to crypto."The historical precedent demonstrates that the market winner(s) may not necessarily be the biggest corporation, but the group that solves the most consumer pain points.
Dash is already working at Libra's public objectives, but can benefit from the contrast
The Libra's publicly stated goal "is to enable a simple global currency and financial infrastructure that empowers billions of people" and claims to be built on "a secure, scalable, and reliable blockchain", according to its white paper. Libra also has a "reserve" to help stabilize its value against other currencies by buying and selling currencies and assets like a currency peg system and "is governed by the independent Libra Association tasked with evolving the ecosystem".
Dash, as with other leading cryptocurrencies, accepts the trade-off of volatility for true free market and decentralize currency by not having any sort of pegging system. Dash also takes a step above the Libra with its Decentralized Autonomous Organization that allows masternodes to vote on and fund projects that advance the Dash network in a decentralized way. Whereas "the Libra Blockchain only grants votes to Founding Members, entities that: (1) meet a set of predefined Founding Member eligibility criteria and (2) own Libra Investment Tokens purchased in exchange for their investment in the ecosystem", according to the technical paper. While Dash and Libra have similarities, Dash focuses more on decentralizing aspects of the currency while still scaling and being digital cash. Dash can thus benefit from the wide attention that Libra is getting and showing how Dash can actually accomplish the same thing, but by giving individuals more power and less risk of censorship.
Posted from Dash News : https://dashnews.org/facebooks-libra-already-has-government-officials-nervous-but-history-shows-a-high-risk-of-failure/