It is not looking good for the Zuck Buck. The reserve-based cryptocurrency, better known as Libra, faces a new challenge on a separate flank from national governments and central bankers.
Lucas Geiger, a co-founder of blockchain startup Wireline, revealed plans to fork Libra into OpenLibra during his presentation at the ethereum-developers conference Devcon, reported CoinDesk’s Christine Kim.
The proponents of the stable coin, which will be pegged to Libra, have received backing from the Interchain Foundation as well as personal funding, according to Kim’s story. They also have posted their permissionless version of Libra’s virtual machine, dubbed MoveMint, on GitHub.
OpenLibra won’t be a Libra killer. At best, it will be a pebble in the shoe or a papercut dipped in vinegar for Facebook and the Libra Association. For OpenLibra to succeed, Libra first has to succeed.
However, that is looking less likely by the day as legislators and central bankers continue to ramp up the pressure on Libra Association members.
PayPal has ready reportedly dropped out of the cryptocurrency’s governing body while US Senators Sherrod Brown (OH-D) and Brian Schatz (HI-D) ramp up the pressure on Visa, Mastercard, and Stripe to also quit the project.
If the senators are successful in their quest, it will leave only Latin American vendor Mercardo Pago and Dutch vendor PayU as the only participating payment networks in the Libra Association.
Although Libra’s reserve fund of sovereign debt instruments is a creative way of providing instant value to the cryptocurrency, it was not Libra’s most critical feature. It is the relationship that Libra would have with the global payment networks.
A currency’s actual value comes if someone agrees to take in exchange for goods or services. If the currency is difficult to spend, people won’t use it. By having Visa, MasterCard, and Strip on board at the beginning, Libra could leapfrog the retail growth pains that bitcoin, ether, and the countless host of other cryptocurrencies face. Without a relationship with these global payment networks, Libra has an uphill battle regarding adoption.
Whether hubris or arrogance, Facebook completely underestimated the resistance that Libra would generate. It has two choices: It can try to steamroll national governments as well as their financial regulators and central banks or step away from Libra Association’s project and let it succeed or fail on its own.
The latter would be preferable. But given Facebook’s corporate management, the social media giant likely will select the former. Buckle up; it is going to be a bumpy ride.