Every time Facebook speaks in favor of Libra, its ship sinks a bit more. Its arrogance may be its doom; and with a decreasing number of supporters, and a dissapointed community, it seems that the worst thing that could ever happen to Libra is being invented and promoted by the social media behemoth.
Last month, David Marcus faced the Senate and the Congress to defend Libra, but instead, politicians made very clear how hard it would be to convince regulators about Facebook's good intentions.
Why Facebook's Rethorics May Kill Libra
A typical citizen may forget that Facebook manipulates their private data, but the US financial system won't. Regulators won't give more power to a company that —for the sake of making money— allowed scandals like Cambridge Analytica, the Russian interference in the elections, or the violent scenarios of Sri Lanka, Venezuela and Myanmar to happen.
And Facebook's policy of apologizing one scandal after another, seems to have filled the patience of lawmakers. In fact, altough there's some pro-blockchain sentiment, the message was evident in both hearings: The United States don't trust Facebook.
Besides regulations, Facebook's image is extremely important for Libra to succeed. Just as an example, Amazon handles users' data in a pretty scary way, but as Ban Mezrich says, it would be much easier if they were in front of Libra. Why? Because we trust them.
In fact, Microsoft recently updated its policies, admitting it listens to your conversations, transcribe them and stores your private data to satisfy its own corporate interestes... and most of the world seemed to be OK with it.
At first glance, it seems that Facebook has killed Libra before its birth simply by engaging with it, and its arrogant stance does nothing to make things better.
In several occasions, lawmakers and experts have asked Marcus why Facebook is creating a cryptocurrency, even though it could not even offer a safe and reliable service to its users. Marcus' response has been simply a "Because we can."
No one believes that Facebook is promoting a multi-million-dollar project just to sell ads, much less because of the humanitarian gesture of "banking the unbanked." Facebook wants to privatize world's finances, and regulators are aware of this.
Don't try to hide your intentions, Zuck.
The "Sillicon Valley Arrogance" is Leading libra to a Dead End
Likewise, Facebook has tried to defend Libra by diminishing its influence on the Libra Association. But is there a bank or a regulatory institution involved? No
Alexandria Ocasio-Cortez put this in simpler words:
"We are discussing a currency controlled by an undemocratically selected coalition of largely massive corporations."
All things considered, it is an enormous risk to global financial stability to allow this group of private corporations to dictate the way the world will interact.
Another thing that Mr. Marcus keep saying over and over again is that the government should let them run a global currency, just because if they can't, someone else will:
But politicians are not tech dreamers chatting at a Cafe in San Francisco. They won't let Facebook take over global finances just out of a cheap excuse. This is a matter of power, and Facebook should have a different approach if it want to succeed.
That kind of "Sillicon Valley Arrogance" Brad Garlinghouse talks about can lead to Libra's undoing:
There's a little bit of "Sillicon Valley arrogance" with how Facebook approach this... In order for these technologies to be used well and taken adavantage of, it has to be done in a regulatory compliant way
In other words, Regulators lead Facebook's path, not the other way around. It's not about innovation, it's about law.
Regulators Won't Trust Facebook If It Keeps Dodging Their Concerns
Besides, The strategy of putting itself out of the equation to lessen the impact of its damaged reputation is a vain effort that many legislators are not going to buy: Facebook designed, developed, and created Libra.
The lack of clarity in relevant answers has always been a clear signal that there is something to hide. Just as when Arthur Hayes told Roubini that BitMEX is established in Seychelles "because of its beautiful weather," Marcus said they chose Switzerland because there is a lot of activity.
He could explain how difficult it is to start a business in the United States due to the many regulations and bureaucratic procedures that exist in the country, but no, Switzerland has a lot of activity.
Facebook Has a Lot To Do
Mr. Marcus assured that Facebook is willing to correct their mistakes, but politicians don't trust Libra, and neither does the crypto community.
The people's money is not their holiday photo album, and so far Facebook has not guaranteed that it will not abuse its power. And asking for trust without earning it is a very risky move