As the year draws to a close, it’s fascinating to realize that one of the biggest stories in the payments industry came from a company traditionally outside of it – Facebook.
In June, the social media giant formally announced its new digital currency, Libra, with a stated mission to make online digital payments more efficient and provide financial access to unbanked populations.
This news was followed by a white paper and a subsequent announcement regarding the formation of the initial Libra Association partners. At the time, the consortium included the likes of Visa, Uber and Andreessen Horowitz (though Visa and others, like PayPal have since left the group).
Shortly after the announcement, things got interesting as David Marcus, Libra board member and leader of new Facebook subsidiary Calibra (a wallet for the Libra currency), testified on Capitol Hill in July and Mark Zuckerberg followed in October where he publicly claimed that Libra was not a threat to national security, nor would it facilitate money laundering or endanger users’ assets.
Congress remained resistant despite the testimony and Zuckerberg wisely agreed to delay Libra’s launch until U.S. regulators approve it. Around the world – and especially in the U.S. – regulatory scrutiny has been increasing over cryptocurrencies launched by private enterprises, especially those (like Libra) which used a “permissioned” system which leaves control over the digital currency in the hands of the issuing company or consortium. As a former lawyer, I know it is far better to work with regulators to ensure their concerns are satisfied than to ignore the legal critics.
But even as Libra development pushes forward, let’s say for argument’s sake that in spite of government concerns, Libra gets the go-ahead from Congress and actually launches.
Would the arrival of Libra even matter in the long run? I ask this because the problem Facebook has been trying to solve has already been resolved by bitcoin more than 10 years ago – and in a way which acts as a commodity (data) and triggers fewer regulatory problems.
There already exists a fast, low-cost, frictionless electronic cash system that was designed for global payments. It is bitcoin’s original design, now reintroduced as Bitcoin SV (BSV). BSV has the massive scaling plan and technical roadmap to support a global digital payment system. Transactions on BSV are quick and very low-cost to process – it currently costs less than 1/20 of a U.S. cent to send a transaction on the BSV network to anyone, anywhere in the world. Facebook does not need to build Libra when it and its partners can simply adopt BSV to achieve their goals.