Why does Facebook announce Libra cryptocurrency now?
In the last article I have explained about Facebook plans to release new cryptocurrency Libra. But the official launch was programmed for 2020. Recently we’ve found out that Facebook has already announced it beforehand and there are several reasons to it. Let’s have a proper look on them.
But there are also new details about it - apparently Facebook won’t fully control Libra, instead get a single vote in its governance like other founding members of the Libra Association, including Visa, Uber and Andreessen Horowitz.
The association will promote the open-sourced Libra Blockchain and developer platform with its own Move programming language. They also plan to sign up businesses to accept Libra for payment and even give customers discounts.
So why does Facebook announce its cryptocurrency now?
Laws are not yet settled with bitcoin and government reintroduced token taxation act. According to it, there is a new term, “digital token,” which excludes tokens from the definition of security. Historically there were a case when a project cost around $133M shut down because of not being able to avoid unregistered securities status for bond and share tokens.
Hence, this gives many tokens the opportunity to grow in the states before Facebook releases their Stablecoin. Facebook knows the value of network effect and that it’s hard to get users once they stay loyal to a specific product, which is why they wanted to give a teaser for people to look forward to.
Another reason is other strong competitor as decentralized exchanges (DEX) are now making Stablecoins themselves. The DEX objective is to offer an easy experience for the consumer.
A DEX could possibly abstract out the brand and diversify where the users’ money goes when they decide to buy a Stablecoin through a DEX. Good example of DEX today is Binance, leading player in the market. Binance will be able to manage multiple currencies and become validators across multiple Stablecoin projects. Hence, people would rather choose to trust Binance to do all work for them. Unless there is specific Stablecoin is worth investing in, what Facebook will try to be.
Regarding all this Facebook is announcing its project now to anticipate, make people looking forward to, and avoid them feel loyal to other projects.
What do you think about new Facebook cryptocurrency project? Will it be successful? If you have your question, please write it below, I would be glad to answer it or to introduce your project to my team at Astorts Group to be evaluated