Earlier in 2019 Facebook announced plans to launch its own cryptocurrency – Libra. The currency aims to launch in the first half of 2020, and the intention is for it to be backed by a basket of currency assets to avoid the wild swings of Bitcoin and other cryptocurrencies.
The idea received generally favorable reactions from financiers (albeit with some big institutions feeling threatened). In theory, cryptocurrencies have the potential to make paying for items easier, allowing people to move money around without the need to change money from one physical currency to another and without being exposed to high transaction fees and losses due to exchange rates.
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There have, however, been concerns about what Facebook might do with the data it collates from Libra transactions. Ray Walsh from ProPrivacy.com, told Digital Journal: “Facebook has promised not to use data amassed from the Libra blockchain to improve ad targeting without the consumer’s consent… if Facebook’s previous services are anything to go by, it seems likely that consent will be linked to Libra from the get-go — giving Facebook users little option but to agree should they want to take advantage of the ease of use provided by integrated Libra payments across its platforms.”
In relation to this, both France and Germany have pledged to block Libra from Europe.
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Facebook had signed up 100 major league partners (the ‘Libra Association’), such as VISA, Mastercard, PayPal, Uber, Coinbase, Vodaphone, eBay, and others. Now, the BBC reports, PayPal have dropped out. PayPal has not indicated why it has undertaken the u-turn.
The launch was never without risks, as Digital Journal’s Paul Wallis writes: “Bringing a new, well-backed cryptocurrency into the global market is a gigantic step. The problem is that nobody’s too sure where that step is going.”
In response to PayPal’s withdrawal, Libra Association said it was aware that attempts to “reconfigure the financial system” would be hard.
“Commitment to that mission is more important to us than anything else,”Facebook tells the New York Times. “We’re better off knowing about this lack of commitment now.”
