PayPal withdraws from Libra, Visa and MasterCard hesitate, and the digital currency of Facebook is yellow?

In June of this year, Facebook announced the release of its own digital currency Libra (Chinese name: Libra) project has attracted widespread attention in the global Internet circle, everyone is worried that Libra will not completely subvert the current currency market, however Before the news that Libra coins subverted the money market, Libra Co., which had not yet had time to go public, was hit, and its founding institution, the famous American "Alipay" PayPal, announced its withdrawal from Libra. Why did PayPal withdraw at this time? Is there any future in Libra coins?

First, Facebook is a good one.

On October 4, local time, PayPal, one of the founding members, issued a statement announcing the withdrawal from the Libra Association. PayPal said in a statement that the company decided to abandon further participation in the Facebook-initiated Libra project and will continue to focus on the company's existing mission and business focus. At the same time, PayPal said, "We will continue to support Libra and look forward to continuing our dialogue on how to cooperate in the future. Facebook has always been a long-term strategic partner of PayPal and will continue to work with Facebook and support Facebook."

According to foreign media reports, PayPal's withdrawal from Libra is mainly due to concerns that Facebook has not done enough to eliminate the suspicion of Libra projects or being used for money laundering. In the face of PayPal's withdrawal, Dante Disparte, director of policy and communications at the Libra Association, responded in an interview with the media. “Participating in the Libra project requires courage and perseverance. This is an opportunity to make things better and improve financial inclusion. It is also a long time. A challenging journey, "The commitment of this mission is more important than anything. Now it is better to understand that this lack of commitment is better than understanding it later."

As one of the founding members of PayPal announced the withdrawal, the rest of the members did not make any public announcements, but at the beginning of the Libra Association's creation, they appeared to have reservations. According to foreign media reports, PayPal, Visa and MasterCard signed a non-binding letter of intent with other 25 “founding members” companies and agreed to invest 10 million US dollars. However, so far, no company has paid a penny. At the same time, no Libra Association member has publicly supported the Libra project.

In addition, according to media reports, Visa and MasterCard have been “reconsidering” to participate in the Libra project. The withdrawal of PayPal, the indecision of Visa and MasterCard actually caused a very large uncertainty in the Libra project. Once someone brought it, it would be a very likely thing to trigger the exit of other members. .

Second, PayPal wants to withdraw from the Libra coin?

In fact, the withdrawal of PayPal is not surprising. Why do you say that? PayPal is an Internet payment company born in 1998. It is the originator of Alipay and WeChat payment. It is also known as the US version of Alipay. As an Internet payment company, PayPal is engaged in Internet payment, which is what we call Money transfer business. What is money transfer? For most of us, the currency we use every day is only the legal currency issued by central banks. Because central banks use paper currency in the process of currency issuance, instead of using electronic The distribution method, so we often have a process of depositing money into the bank after we get the money, and then bind PayPal as a payment tool for payment operations. Even if we use a credit card payment method, when credit card repayment is made, if no one deposits money into a financial institution such as a bank, there is no way to repay the credit card. (Of course, the phenomenon of direct issuance of electronic money at this stage is also quite a lot. I will not make too many remarks here for the sake of understanding.)

PayPal's business is the process of converting money from paper money to bank cards (debit cards, credit cards or simple bank accounts) and then converting it into electronic money. What PayPal does is the transfer of money, which we generally call transfer clearing. Well, the problem is coming. As we all know, Libra is a digital currency. The most famous one is Bitcoin. Although the current Libra has not been officially released, the way of using the digital currency of Libra will be problematic.

First of all, Libra coins are no longer released in the form of paper currency, but are distributed in a digital way. Once digitized, the basis of all previous business will disappear for the participants of the previous electronic currency transaction. .

Secondly, since Libra is a digital currency, its trading method can use direct peer-to-peer trading based on blockchain. As long as the digital currency can be traded in point-to-point, we do not need to use it in the transaction process. Bank cards do not need to use Alipay and WeChat to pay. Direct transactions are not good, so there is no need for PayPal's own business.

Third, both Alipay and PayPal are part of an international payment system. They are enterprises that are bound by the host government. Once the Liana currency is issued, it may shake the currency distribution rights of the country. The currency distribution right is a ratio. Any right that is important to the law, then once you continue to support Libra, PayPal may even be shaken by its own roots.

Then, since Libra is one of the kind, destroying the foundation of PayPal business, destroying PayPal's own business, and even shaking its legitimate roots, then it is not worth the effort to support Libra from the perspective of PayPal itself. It is better to launch it as early as possible. In the same way, famous international bank card organizations such as Visa and MasterCard also have such problems, which is why they hesitate.

3. Where is the future of the Libra coin?

On the whole, Libra is a very good design. It discovers the drawbacks of the extremely unstable currency in the traditional digital currency, thus launching its own “stable currency” concept, which promotes Libra’s real Digital currencies that can be globally circulated have very important strategic implications.

However, we must say that, the biggest problem with Libra coins is that its existence has shaken the currency distribution rights system represented by the US dollar, the Japanese yen, the euro, etc., and the currency distribution rights as an integral part of national sovereignty. No country will be willing to infringe on its own currency distribution rights, even if Facebook is the world's largest social platform for issuing digital currency, although countries will not easily limit Libra for reasons that infringe currency distribution rights. The issuance of coins, but will certainly look for reasons including anti-money laundering, currency security, privacy protection, etc. to limit the development of Libra. PayPal's introduction of Libra coins can also be said to be the role of this policy-oriented.

Then, the most likely situation is that with the development of Libra, under the coercion and restrictions of the regulatory authorities all over the world, Libra will eventually become a kind of Hong Kong dollar, closely watching the US dollar or a certain world currency. The existence of the vassal currency, used in a smaller range, deviated from the original intention of designing the Libra coin.

In any case, Librae’s future difficulties are still very large. We must make a big question mark if Libra Coin can go on.

Author: Jiang Han-field observation

Source: Jiang Yan Vision (Public Number)