In June 2019, Facebook announced the launch of its proposed digital currency, Libra. But since then the social media platform has run into a number of roadblocks; from France blocking the currency’s development in Europe, to Mark Zuckerberg getting a grilling by US lawmakers about Libra’s privacy policies. As it stands, it doesn’t look very good for the social media giant’s latest venture nor does it look like it will get any easier for the company, especially as the US House Financial Services Committee is still unsatisfied with the steps that Facebook has taken to try launch Libra.
With all the bad press and Facebook and Zuckerberg’s trustworthiness at an all-time low, is it time to abandon the whole cryptocurrency venture?
A BBC News article recently reported that some of the biggest payment companies including Mastercard, Visa and PayPal have pulled out of the project. PayPal released a statement saying:
“PayPal has made the decision to forgo further participation in the Libra association at this time and to continue to focus on advancing our existing mission and business priorities as we strive to democratise access to financial services for underserved populations. We remain supportive of Libra’s aspirations and look forward to continued dialogue on ways to work together in the future. Facebook has been a longstanding and valued strategic partner to PayPal and we will continue to partner with and support Facebook in various capacities.”
Although most of the companies leaving didn’t give a reason as to why they were leaving, you can assume that the scrutiny from regulators and France’s stance hasn’t helped.
Should Facebook be looking at new ventures when it has an already damaged reputation to repair? To be clear, Libra isn’t actually Facebook’s cryptocurrency. It’s the project of the Libra Association, which Facebook co-founded. But we did find out from the testimony on Wednesday that Zuckerberg acknowledged that having people use Libra would likely drive up the cost of advertising on Facebook, which would benefit the company. Facebook’s secret weapon in all of this is Calibra, a digital wallet that is designed to work on top of Libra’s blockchain and resembles a normal payments company but its integration with Facebook’s enormous user base could give it a significant advantage over any rivals. With its ability to leverage WhatsApp, Messenger, and Instagram, Calibra could very well become Facebook’s next big thing.
The signs don’t look good for the Libra currency succeeding. Companies are looking to distance themselves from the project and with regulators watching every move Zuckerberg has an even steeper hill to climb and with more investment needed. Facebook is still dealing with the consequences of the Cambridge Analytica scandal and the damage to its reputation, as well as ongoing issues concerning fake news, political advertising, privacy… the list goes on.
I can’t help but think that with Facebook’s deep pockets and the limitless potential of a proprietary digital wallet as motivation, the idea isn’t necessarily dead just yet.