Facebook has announced the launch, in 2020, of its currency and payment platform with which it aspires to emulate WeChatPay, the Chinese giant that for years has integrated payments into its social network. Unlike the Chinese platform, which operates a centralized payment network and is fully controlled by them, <a href="https://www.cryptoknowmics.com/crypto/facebook-co-founder-believes-libra-would-weaken-developing-countries/">Zuckerberg</a> has decided to coat Libra with the decentralized attributes of a <a href="https://www.cryptoknowmics.com/crypto/is-bitcoin-price-stalling-what-next-manage-crypto-portfolio-btc-technical-analysis/">cryptocurrency</a> like bitcoin.

Facebook rightly understands that only by ceding part of the control and offering exemplary transparency will they be able to convince partners, including potential rivals such as Visa, to participate in the project and give it the critical mass of users and acceptance that is essential for a payment network or currency to be useful. By opening its code to the world, Libra allows network participants to see for themselves that there is no cat locked in and that Facebook is not trapping them on a platform whose terms of use may then change arbitrarily.

But Libra is looking for an impossible balance. On the one hand, it pretends to have the global reach and incensurable quality that bitcoin presumes. On the other hand, they cannot risk giving up all control or rejecting the regulator's tutelage. Calibra, the Facebook affiliate that will create Libra, and the Libra Association, which will manage the protocol, have made a precise determination from the outset to operate in collaboration with regulatory authorities.

They forget that it is the current regulation and not the technology that today puts up the barriers that prevent a global payment system that allows a Nigerian to send money to a Frenchman instantly. Financial borders are not technical, and they are legal. The first thing regulators in the US and the EU will insist on will be the application of money laundering prevention (AML) and know-your-customer (KYC) rules.

The result will be the need to block billions of users precisely in the countries where there is the largest unbanked population. And, of course, block international payments between countries with very different financial regulations. All of the above refers to the usefulness of Libra as a payment network.

Bitcoin does not belong to anyone
The matter of creating one's own coin is even more thorny. Not a few countries will refuse to renounce their monetary sovereignty by allowing the free circulation of an alternative currency. These risks also hang over bitcoin, but bitcoin does not belong to anyone.

There is no company or association to put legal pressure on to modify the protocol in accordance with local rules. There is no "Bitcoin Association" that can negotiate with the regulator or lobby. A country can ban bitcoin from its citizens (something else is that it is able to enforce this ban), but it cannot change bitcoin.

Libra claims to be a "stablecoin" or stable cryptocurrency. That is, it will have a backing (theoretically 100%) in traditional currencies and assets. Obviously, that fund used to back up the value of the Libra is not only an attractive piñata for hackers, governments, tax authorities, banks and even the members of the Libra Association themselves, but it is also another point of fundamental centralization and control.

No company that has 100 million parked to back up Libra can afford to take risks that could lead to a lawsuit or fine. Just as banks have paid billions in fines in money laundering cases over the years, Libra could be exposed to the same fines if it doesn't do its part to control and censor the use of its payment network.

Libra will be seen shortly after its launch at the crossroads and will have to choose between the path of crypto-money, open source, and decentralization or the path of centralization, censorship, and regulation. I am convinced that when the time comes, the scales will be tilted towards turning Libra into a new <a href="https://www.paypal.com/in/home">Paypal</a> or <a href="https://pay.wechat.com/en_hk/index.shtml">WeChatPay</a>: a centralized payment system.

Meanwhile, Bitcoin continues to grow after ten years in operation worldwide and will exceed 100 million users this year. Facebook will help teach billions of users how to operate cryptocurrency and will teach bitcoin companies (some of which participate in Libra) to create tools that are more straightforward to use and integrated into social networks with more users. The best thing Libra has done is to recognize the value of bitcoin and give the backing of some of the world's largest financial companies to its technology. Imitation is the best compliment.

The reasons why Facebook's crypto won't beat Bitcoin

Alejandro is a big time crypto enthusiast. He spends most of his day either writing about news and innovation about cryptocurrencies or finding the new hidden gem to add to his portfolio.

The reasons why Facebook's crypto won't beat Bitcoin

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