At the recent World Blockchain Forum in New York, one of the speakers asked who in the audience thought Libra was likely to succeed in taking cryptocurrencies mainstream. About half the room raised their hands. He then followed with “who wants it to be Facebook that achieves this?” All hands were hastily lowered.

It comes as no surprise that a crypto audience would respond in that manner. Under Facebook’s strict advertising rules, the majority of crypto organizations found themselves unable to promote their offerings via the site. It begs the obvious question of whether the ad ban was a calculated move in anticipation of launching their own cryptocurrency.

However, contempt for the proposed digital currency extends far beyond the crypto industry. It has received blow after blow. France and Germany have banned it in advance, seven out of the original 28 backers abandoned the project, with suggestions of regulatory pressure encouraging those exits. Zuckerberg could well be flogging a dead horse.

Peak Libra Hatred

Lawmakers demonstrated peak Libra hatred on October 23rd, when the U.S. House of Representatives Committee on Financial Services grilled Facebook’s CEO Mark Zuckerberg.

As Zuckerberg testified himself on the creation of a digital currency to serve the unbanked, “I’m sure there are a lot of people who wish it was anyone but Facebook who were helping to propose this.” The full transcript of the testimony can be found here.

Would the currency have had more of a chance of success if it was launched by a less controversial company?

At its core, Libra is an excellent idea. Currently, 1.7 billion adults in the world don’t have access to a bank account, with the equivalent numbers without access to social media or a smartphone dramatically lower. Many in the developing world have leapfrogged legacy banking altogether, with surging mobile and then smartphone rates.

Having a stable digital currency that transcends borders and is useable by anyone with access to a smartphone would democratize global payments, allowing people who have previously been shut out by the financial system to send and receive cash on a daily basis.

So Why the Hostility?

Facebook is too powerful a corporation for governments to ignore. Were significant numbers of people to abandon national fiat currencies and opt for Libra to transact, it would leave central banks with substantially less leverage over monetary policy to help guide economic activity.

According to a December 2018 study by Statista, Facebook was the least trusted tech company in the world. By a long shot. Forty percent of respondents said they trusted Facebook least with their personal data. Twitter and Amazon tied for second at eight percent.

Facebook has done everything in its power to earn that mistrust. From the Cambridge Analytica scandal, its ongoing problems managing political advertising, banning crypto ads ahead of creating its own, to data breaches, the Menlo Park-based behemoth has continuously trodden down the wrong pathways.

If one is to accept the potential benefits of Libra, which are debatable anyway in a sector with over 3,000 cryptocurrencies, perhaps the project was doomed since its inception for no other reason than the horse was being ridden by the wrong jockey.

Motives also need to be examined. If the company’s aim was driven by the malevolent desire to bank the unbanked, why couldn’t it incorporate an existing crypto asset into its infrastructure to allow seamless cross-border payments, micro or macro? Twitter has proven how simple that is to do by hosting torching campaigns.

They are novelties, yes. But they did serve to prove the viability of cryptocurrencies to perform seamless microtransactions.

Could the IMF Introduce a Libra Style Crypto?

Given that Libra betrays many of the now eleven-year-old central tenets of the cryptocurrency revolution anyway, would a project in a similar vein be better in the hands of, if not a particularly well-trusted entity, at least one with the expertise and heft to manage it? 

It is a little known fact that the IMF has its own currency, of sorts. The body’s internal accounting unit, Special Drawing Rights (SDRs), are “supplementary foreign exchange reserve assets defined and maintained by the International Monetary Fund… [that] represent a claim to currency held by IMF member countries for which they may be exchanged.”

SDRs are valued by reflecting “a weighted average of the world’s leading currencies.” And they are not immune to volatility, moving 20 percent against the U.S. dollar in 2015, for example.

An IMF-managed Libra-esque cryptocurrency flies in the face of the promise of decentralization and censorship-resistance. But so does Libra. And despite the Financial Stability Board’s cautious attitude toward stablecoins, if governments worldwide do predict the imminent threat of a march toward crypto and away from government-issued currency, the very least they could do is attempt to ease one of the pain points of the current monetary system, which is cross-border transactions.

How the Libra fiasco works out from here is anyone’s guess at the moment. One can’t help but wonder, however, if the Libra horse will actually cross the finishing line at all.

Easing global payment bottlenecks is a compelling idea, if that’s indeed its aim. But with little else appealing about it, Libra just tackles a problem solved eleven years ago. Perhaps there isn’t a jockey in the world that stood a chance of riding Libra down the straight.

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