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- Facebook will finally launch its Libra cryptocurrency in January 2021, but very different from the initial plan.
- Bitcoin and Ethereum will face a new competitor.
It was announced today that Facebook’s long-awaited and controversial digital currency Libra will launch in January 2021, according to a report released by the Financial Times. However, Libra had to change from its original format, presented 1 year ago, to see the light of day. Therefore, according to the Financial Times, three people associated with the Libra project have confirmed that the Libra Association plans to launch it solely on the back of the US dollar.
Facebook announced its intention to enter the cryptocurrency market by informing its plans to develop its own digital currency, called Libra, which would be backed by a basket of several fiat currencies, such as the dollar and the euro. In fact, at the beginning, companies such as Visa, PayPal and MasterCard supported the project. However, Facebook’s path to success was hampered by the regulatory concerns brought about by the project.
Just three months after the announcement, the European Central Bank had already warned that Libra could pose a threat to the monetary policy of the European Union, as well as to the Euro itself. The challenges faced by Facebook together with the Libra Association make up a long list. Therefore, Libra would not have seen the light if it failed to calm the nerves of the regulators.
Thus, in April 2020, Libra changed strategy and abandoned the idea of a token linked to a basket of global currencies. It would no longer be a Stablecoin but a digital currency destined to function as a payment network and which, moreover, would be linked exclusively to the local currency in which it operates. Libra will be supported exclusively by the US dollar in January 2021.
The ambitions of the project were further reduced to have a positive regulatory and political reaction. To date, there is no precise date for launch as the approval of the Swiss Financial Market Supervisory Authority, or FINMA, is required to operate as a payment service.
Certainly when Facebook’s plans to launch a Stablecoin that could easily rule the world were announced, the cryptocurrency market wondered if it could be a worthy competitor to Bitcoin and Ethereum. Perhaps, under the original premise, Libra could have been a fierce competitor to Bitcoin and Ethereum. However, in the current limited conditions, Libra is not in the same category as the above-mentioned cryptocurrencies.
Bitcoin and Ethereum have seen their success because they are not tied to fiduciary coins, these represent freedom. Meanwhile, it appears that Libra will be the digital version of the US dollar and therefore monetary policies affecting the valuation of the dollar will impact the digital currency as well.
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