Mastercard’s CEO Ajay Banga has pulled out from Facebook’s cryptocurrency Libra, over concerns about compliance, making money, and wallets. He reports that Libra’s leaders wouldn’t commit to observing laws, so he couldn’t see how the digital currency would make money. The social networking giant’s plan to store the coins in its Calibra digital wallets did not go well with him either.
Crux of the Matter
What is Libra ?
Libra is a global currency and financial infrastructure developed by Facebook
Built on a secure, scalable, and reliable blockchain, it is a stable coin which is backed by a reserve of assets. It is governed by the independent Libra Association and uses the LibraBFT consensus mechanism. Facebook aims to have 100 members in its Libra Association before the launch, which in on first half of 2020.
The crack in the partnership
Ajay described the lack of a clear business model as a cause for major concern, stating that he could not see the future of their vision to become profitable. The association’s members were not ready to commit to anti-money laundering or data management controls wither. Mastercard jumped ship from the project in October, along with PayPal and Visa, just as the official charter to establish the Libra Association, a nonprofit body overseeing the project, was signed in Geneva.
The red light on Libra
Libra has faced intense scrutiny in recent months as EU competition regulators continue to probe them. US lawmakers grilled Facebook’s CEO Mark Zuckerberg last year on subjects such as Facebook’s handling of financial data, its cooperation with regulators, and why it wants to develop a substitute for the dollar. The association had started with 28 founding members in June 2019, but over the months eight firms have left. Telecom major Vodafone was the latest to withdraw when it decided to focus on its own payment products. Facebook is yet to comment officially on these withdrawals.
Curiopedia
Blockchain is “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way”. It is a growing list of records, called blocks, that are linked using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data.
By design, a blockchain is resistant to modification of the data. For use as a distributed ledger, a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for inter-node communication and validating new blocks. Once recorded, the data in any given block cannot be altered retroactively without alteration of all subsequent blocks, which requires consensus of the network majority. Although blockchain records are not unalterable, blockchains may be considered secure by design and exemplify a distributed computing system with high Byzantine fault tolerance. Decentralized consensus has therefore been claimed with a blockchain.
Blockchain was invented by a person (or group of people) using the name Satoshi Nakamoto in 2008 to serve as the public transaction ledger of the cryptocurrency bitcoin. The identity of Satoshi Nakamoto is unknown. The invention of the blockchain for bitcoin made it the first digital currency to solve the double-spending problem without the need of a trusted authority or central server. The bitcoin design has inspired other applications, and blockchains that are readable by the public are widely used by cryptocurrencies. Blockchain is considered a type of payment rail. Private blockchains have been proposed for business use. Sources such as Computerworld called the marketing of such blockchains without a proper security model “snake oil”. More Info