Visa, Mastercard, and Paypal Possibly Withdrawing from Libra Association as Governments Exert Currency Hegemony

October 4, 2019 / by Zachary Mashiach

In an article from July 2019, around the time that Facebook’s Libra cryptocurrency was formally announced, Crypto.IQ speculated that the death knell of Libra would be centralization

Specifically, Bitcoin (BTC) has been successful because it is decentralized. Bitcoin (BTC) is comprised of a pseudo-anonymous and global network of nodes, miners, and users. In addition, Bitcoin’s (BTC) cryptographic security makes it impossible to shut down the Bitcoin (BTC) network. Essentially, there is no central entity or computer the government can attack to stop Bitcoin (BTC). Therefore most governments in the world have opted to legalize and regulate Bitcoin (BTC). Basically, governments are forced to live with Bitcoin (BTC).

Additionally, the creator of Bitcoin (BTC), Satoshi Nakamoto, completely disappeared, and his true identity is unknown, making it next to impossible for any government to prosecute anyone for creating Bitcoin (BTC).

On the other hand, Libra plans on having 100 node operators, all of which would be major corporations that would pay $10 million each for the privilege of being a node operator and member of the Libra Association.

The problem with this is that the governments of the world know the addresses and individuals associated with each of these companies, and governments are free to harass, sue, sanction, regulate, and seize assets from these corporations at will.

Governments of the world have a fundamental and understandable reason for trying to cripple Libra. Basically, Libra would be an international central bank run by major corporations. Indeed, Libra would have its own version of a Federal Reserve and issue its own fiat currency.

Libra would be in direct competition with central banks and fiat currencies around the world. Therefore Libra would be in direct competition with governments since most of their power is derived from the control of their respective fiat currencies and central banks.

The government of the United States and several members of the European Union, as well as other countries across the world, have pushed hard to stop this corporate attempt at creating a central bank and fiat currency, and it is spooking key members of the Libra Association.

Visa and MasterCard, the biggest credit card companies in the Western world, have declined to publicly support Libra due to concern over regulatory backlash. There are even anonymous reports and speculation that Visa and MasterCard are going to pull out of the Libra Association completely, and indeed, neither has yet paid its $10 million fee to join.

Similarly, PayPal did not show up at a Libra Association meeting, and there is speculation that PayPal is about to quit the project.

This could be a harbinger of things to come. It is clear that governments do not want Libra to exist and are exerting pressure on members of the Libra Association to drop out before Libra even launches in 2020. Further, from a business standpoint, it makes complete sense for corporations within the Libra Association to quit rather than face a brutal attack from any government since most of the members of the Libra Association already have solid businesses that are not worth risking just to be a part of Libra.

Essentially, this comes back to the main point that centralization is Libra’s death knell. If Bitcoin (BTC) were centralized, the governments of the world would have destroyed it a long time ago since it is a threat to the power of governments. Libra is also a direct threat to the power of governments, but simultaneously, Libra has no way to defend itself against those governments due to its centralization.

It is possible that Libra will still launch eventually, but at this point, the governments of the world are ripping away its most powerful members, hindering its potential. If Libra does launch, it may be a shadow of the original idea with limited capabilities since governments of the world will not let it launch until they know it has no chance to compete with central banks and fiat currencies.