By CCN Markets: Facebook has managed to lure some big names to support its cryptocurrency endeavor. According to a report in the Wall Street Journal, payment giants Visa and Mastercard in addition to PayPal and Uber have all jumped onto Mark Zuckerberg’s crypto bandwagon. They are each going to pour $10 million into the project for the opportunity to be part of the governance structure of the new cryptocurrency. They even have a name and will be part of what Facebook is calling the Libra Association in a nod to the codename of crypto project.
It’s understandable why payment companies would want to cozy up to Facebook as the social media giant is set to infringe upon their turf. And it’s not shocking that they would look for a way to participate in the burgeoning crypto space. Here’s the rub. They’ve chosen to follow a tech behemoth with an enormous amount of control over user data, which is the antithesis of decentralized cryptocurrencies and the blockchain. While Facebook will reportedly separate its social media platform from Libra, since when does the world take Mark Zuckerberg’s word for something? As we’ve said before but it bears repeating – a zebra doesn’t change its stripes.
Facebook and Payment Companies: Blind Leading the Blind?
There is a great deal of support for Facebook in the crypto ecosystem for its potential to bring awareness to the masses, or some 2 billion users. Unfortunately, there is also a risk that Project Libra represents nothing more than the blind leading the blind, all of whom will eventually fall into a ditch. Mark Zuckerberg is in the midst of a privacy scandal the proportions of which continue to escalate. Investment funds such as the S&P ESG are even kicking Facebook’s stock out of socially responsible funds because of “various privacy concerns, including a lack of transparency as to why Facebook collects and shares certain user information.” Why would Visa, Mastercard, Uber, and PayPal want to get into bed with a company with these issues still festering?
Bitcoin bull and Galaxy Digital CEO Michael Novogratz has said that Facebook is “wildly important for the ecosystem.” On the other side of the coin, ShapeShift CEO Erik Voorhees told Bloomberg that crypto’s “legitimacy doesn’t come from any endorsement from any group of people or from any bank or from any government.”
So it’s fair to say that the response has been mixed. Decentralization arguments aside, some people just wouldn’t trust Facebook with their money. As one Twitter member stated:
“Facebook is getting into crypto? They’re already incompetent at the whole taking care of personal data thing but sure, let’s allow them to take care of part of our finances too.”
Exactly. If one user feels this way, chances are there are many more with similar apprehension. If corporate America wants to find their place in this industry, they are better off adding support for some of the leading cryptocurrencies that have paved the way for decentralization without compromising anyone’s trust.
Disclaimer: The views expressed in the article are solely those of the author and do not represent those of, nor should they be attributed to, CCN Markets.