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Since its announcement earlier in June, Facebook’s Libra has proved itself to be a polarizing and contentious topic in the financial circles across the world. Even the cryptocurrency community seems divided on Libra’s possible impact on the asset class.
Some see it as a unique opportunity to expedite the mass adoption of the decentralized digital economy, whereas others view it as just another ploy by Facebook to expand its footprint in the global financial order.
Craig DeWitt, Product Director at Ripple and an influential voice in the community, jumped into that debate earlier today by questioning Libra’s legitimacy as a cryptocurrency. According to him, the Facebook-backed Stablecoins are a class of cryptocurrency that aims to provide price stability. A perceived drawback of cryptocurrency is price volatility.... More is not much different from “having a money market account at Facebook.”
DeWitt made a scathing attack on Libra by calling it just a “cash account with a blockchain wrapper.” He seems to be of the view that the real reason Facebook is adding a blockchain-dimension to Libra is to distinguish it from a conventional bank, thus evading banking regulations.
What DeWitt said is not exactly a new allegation. Almost every criticism of Libra more or less focuses on Facebook’s ambitions to disrupt and dominate the global financial order.
This is exactly why the project has been hitting one bump after another right from the time Facebook officially unveiled it. Earlier this month, France and Germany jointly announced that they saw Libra as a threat to the EU economy and hence will be rejecting it altogether.
Even Japan and Singapore, countries usually deemed friendly to the decentralized digital economy, are reportedly wary of Libra’s potential impact on the conventional monetary system and the broader economy. Earlier, there were reports that even some of Libra’s founding partners are finding it tough to publicly back the cryptocurrency fearing regulatory repercussions.
Today’s remark by the Ripple’s product head was in response to an earlier tweet by Brian Armstrong where the Coinbase CEO dismissed the backlash against Libra as “odd and mindless.”
It’s hard for me to understand the difference between libra and just having a money market account at FB.
It’s a cash account with a blockchain wrapper, right?
It’s a path to being a bank with being regulated like a bank – I can see value for FB on that front.
— Craig DeWitt (@CryptoCwby) September 25, 2019
Armstrong’s tweet praising Libra was basically as a shoutout to David Marcus’ recent blog post pitching the Facebook-backed cryptocurrency as a game-changer that will bring financial inclusion and prosperity to billions across the world.
On a side note, Marcus, who is the co-creator Libra, briefly joined Coinbase as a board member before stepping down in early 2018 — right before joining Facebook as its head of blockchain research.
Armstrong called Libra one of the most important cryptocurrency projects in development, further echoing Marcus’ forecast that it could potentially change the world. He, however, added that only time will tell whether or not the Facebook-backed stablecoin actually manages to pull that off.
Meanwhile, in a related development, Mark Zuckerberg’s recent interview with Nikkei has cast doubt on Libra’s 2020 launch plans. When asked about the stablecoin’s expected day of arrival, the Facebook CEO replied:
“Obviously we want to move forward at some point soon [and] not have this take many years to roll out. [..] But right now I’m really focused on making sure that we do this well.”
Do you think Craig DeWitt is being unnecessarily harsh on Facebook and Libra? Share your thoughts in the comments below.
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