Facebook’s Libra has powerful backing but Europe sees a threat

In spite of Facebook’s Libra enjoying powerful backing from some of the biggest global companies, European countries like France and Germany see it as a threat. What do the experts think?

Be sure to check out Part I, Part III, and Part IV of our 4-part interview series with Garrick Hileman of blockchain.com!

Garrick Hileman

“I think that’s operating from a place of fear with just too much risk aversion in mind and not enough of an understanding about the real problems that cryptocurrency can address”

Garrick Hileman, Head of Research at Blockchain tells The Sociable that in his opinion, the outright ban of Facebook’s Libra in countries like Germany and France could prove regressive for an emerging financial system.

“That is too far. That’s preventing the innovation and the competition that Libra offers to the traditional financial system from even getting off the ground. The right approach in Europe, and I think in many markets, is not to block but to manage the rollout in a way that is safe for users and our society,” he says.

Facebook´s Libra Association counts powerful members like Mastercard, Visa, Uber, Spotify, and Vodafone, an indication that awareness regarding blockchain is rising among corporates and governments. Hileman thinks it represents a sea change in terms of a major enterprise.

“Not just Facebook, but its partners Visa, Mastercard, PayPal, Uber, and Lyft endorsing a cryptocurrency platform is a major stamp of approval and legitimization of blockchain technology and its capacity to operate on the scale of these companies,” he says.

Yet, apart from resistance from Europe, Libra has also been called a global payments system ‘controlled by a small and exclusive club of private firms.’

Regulator Resistance

Hileman is sympathetic to regulators who are concerned about the destabilizing effects of cryptocurrencies, which he agrees are a competitive financial product.

Read More: Facebook the accidental philanthropist with Libra?

“In my opinion, no one who is thinking clearly, should want to see a financial crisis occur because of some kind of panic that a competing financial product brings, destabilizing society,” he says.

“The right approach in Europe, and I think in many markets, is not to block but to manage the rollout in a way that is safe for users and our society”

However, he believes the rollout of Libra can be accomplished through a number of steps without resorting to a complete ban.

“I think that’s operating from a place of fear with just too much risk aversion in mind and not enough of an understanding about the real problems that cryptocurrency can address,” he envisages.

Read more: Are you really buying Facebook’s privacy-focused vision? Op-ed

Many business organizations and government organizations today strive to imbibe blockchain in their business. Still, while cryptocurrencies promise big changes to the traditional financial systems, there are government organizations that see it as a threat.

Should Libra, being owned by Facebook and backed by powerful companies, encourage such government organizations or further strengthen their sense of foreboding? Hileman believes in the former.

“Not just Facebook, but its partners Visa, Mastercard, PayPal, Uber, and Lyft endorsing a cryptocurrency platform is a major stamp of approval and legitimization of blockchain technology”

“We’re talking about billions of users. Facebook would not launch a technology that it did not think could scale to the billions of users it has today,” he says.

“It’s a huge vote of confidence in blockchain technology, that will force companies and governments to start thinking about where they invest their resources and IT budgets.”