Mark Zuckerberg has had a lot of negative press recently and bad feeling swirling around him doesn’t seem to be helping the next stage in Facebook’s expansion. That expansion is into the cryptocurrency arena, as Facebook announced in June 2019 it was working on its own cryptocoin. The coin would be run on Facebook’s Libra blockchain and backed by other assets, such as a basket of other currencies including sterling, US dollar, euro, yen, and Singapore dollar. But disaster has struck Libra coin and it looks as though the project may be shelved or even scrapped. But, which other cryptocurrencies could benefit from Facebook’s failings?
Other cryptocurrencies set to benefit?
Facebook’s loss stands to be other cryptocurrency companies’ gains. The fact that Facebook – a company rated as the 5th healthiest brand by YouGov – gives its go-ahead to cryptocurrency helps further legitimize it in the mainstream. Those investing in cryptocurrency will have been able to notice the price fluctuations on other cryptos, such as Bitcoin, Ethereum, and Ripple, to monitor how their daily prices have changed throughout each of Libra’s blows. While some people may have steered clear due to lack of understanding, fearmongering about potential volatility, or even resigned themselves to miss the trend, Facebook’s interest could have helped kick start crypto in a big way.
The attention the sector has gained from Libra means that more investment will be poured into blockchain on the whole. Indeed, this is combined with the bullish behavior of Bitcoin price, which saw several price rises throughout October. Other forms of blockchain are gaining ground, with its functionality as a ledger being proven in whimsical ways such as CryptoKitties, which have had people spending over $1 million using the Ethereum blockchain they are based on. Real life applications for gaming – it is not dissimilar to Nintendo’s Nintendogs, a popular game from the 2000s – show just what the blockchain can do. The uniqueness is reinforced and the fact that details are safer and more secure is hammered home to those who use it, to prime them for the wider adoption of cryptocurrency further down the line. Facebook’s amplification of cryptocurrency for lawmakers and those who would use it has helped the industry hugely.
Scales not tipping in Libra’s favor
Trouble began for Libra when Zuckerberg claimed that he wouldn’t launch the currency until he had the appropriate approvals from the US regulators in July. What he didn’t anticipate was the level of scrutiny he would face for his links to data breaches. Grilled by the US House of Representatives financial services committee – including rising star Alexandria Ocasio-Cortez – Zuckerberg found himself flailing. The focus shifted from Libra to Facebook’s armada of other fact-checking issues and its involvement in the spread of ‘fake news’.
The main opposition to Libra is the fact that Facebook have proven themselves to be less than trustworthy with data and regulation – so who would regulate the blockchain? Questioning moved on towards racial biases in Facebook software to Facebook’s role as a shadow government. Indeed, it’s the 2016 Presidential Election that has landed Facebook in so much trouble, and the launch of GDPR in EU countries, which has shed light on the malpractice with data. Ultimately, while no moratorium on Libra was announced, the project looked shaky. Throughout October, the major backers, and the companies that helped give legitimacy to the blockchain project – PayPay, Mastercard, eBay, and Visa – abandoned the project.
The failure of Libra so far hasn’t been its blockchain basis or the fact that it will launch an emerging currency, but the fact that it is being run by Facebook amidst the legal issues. But this could spur another company on, who might possess the same clout with the mainstream masses and the same technical expertise that Facebook has. Until then, it looks like other cryptocurrencies are going to benefit.
However, should Facebook’s investigation into regulation for cryptocurrency inspire lawmakers to throw up legislation that halts the entire industry, then this attention could be of the negative kind. The regulatory aspects of blockchain are one of its strengths – the lack of an intermediary or big bank attached to the blockchain payments is why many people opt to use crypto in the first place. Extensive regulation could water down these benefits and leave crypto in the same state as traditional financial methods. When the G7 get involved with issues regarding your project, you know you’re in trouble. A statement from the task force assigned to Libra’s development decreed that the project will not be allowed to operate until Facebook proves that it is secure and safe. As Zuckerberg’s unraveling relationships and timelines are proving to further discredit the reliability of the social media company, this looks to be a project kicked into the long grass.