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Can you trust this man with your money?

by Michael Stark

The Launch and Fallout of Facebook’s Libra Cryptocurrency

Libra, a new cryptocurrency, was announced in a white paper on June 18, 2019. The reaction was unlike the usual lack of attention received by most new digital currencies. With promises of efficiency and stability, as well as a focus on aiding the unbanked population, Libra garnered a significant amount of interest from the moment of its launch.

Facebook’s involvement as the lead partner in the project further elevated its profile. Fresh from a series of data privacy scandals, the social media giant’s collaboration with a coalition of major tech, finance, and commerce companies to create a new global currency grabbed the world’s attention. The ambitious plan proposed to roll out the cryptocurrency in early 2020.

However, in the weeks and months following the announcement, Libra faced mounting criticism from various quarters. Cryptocurrency enthusiasts questioned its legitimacy, arguing that it did not adhere to the fundamental principles of the community. Economists warned of its potential to challenge countries’ control over monetary policy, while lawmakers and regulators worldwide announced investigations and potential actions against the fledgling currency.

The backlash intensified in early October when several high-profile companies, including PayPal, eBay, Visa, Mastercard, Stripe, and Mercado Pago, withdrew from the project, leaving only one payments partner, fintech company PayU. The exodus raised further doubts about the feasibility and future of Libra.

The scrutiny culminated in Facebook CEO Mark Zuckerberg testifying before the House Financial Services Committee on October 23. Lawmakers expressed deep skepticism and raised concerns about the potential impact of Libra on global financial stability and the erosion of democratic processes. The committee chair, Maxine Waters, even called for a moratorium on Facebook’s development of Libra until Congress could properly consider the issues it raised, suggesting that the company focus on addressing its existing problems.

As of now, the future of Libra remains uncertain, with its ambitious goals and promises facing intense scrutiny and skepticism from regulators and industry players. Despite the initial hype and attention, the path ahead for Facebook’s cryptocurrency venture is fraught with challenges and uncertainties.

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