Libra is a new digital currency from Facebook. It has garnered a lot of attention lately. It’s been grilled by the government, scrutinized by crypto community. I think Libra is an interesting addition to cryptocurrency space. Like most other altcoins, it has a small chance of success.
The Libra Association
Libra is a currency that will be governed by the Libra Association. Facebook took the consortium driven approach. They already lined up an impressive group of members. By taking this route, Facebook is using a similar model to open source software. Most of the big open source projects are driven by a consortium. For example, the Linux Foundation supports the development of Linux.
Why Libra Association is Likely to Fail
The Libra Association is trying to govern a new currency. When you deal with money, there are too many players in the ecosystem. It becomes extremely difficult to make these players cooperate. I believe this will be the main challenge of the Libra Association.
Open source software only deals with a small part of software ecosystem. Their governance model is simple to manage. Consortiums work because they are small enough to attract and promote the right stakeholders.
Facebook is asking corporations big and small to work together. Imagine if you are a startup and pay your membership to the Libra Association, you have the same voting right as Visa. That is not going to work for Visa corporate interest.
How Libra Can Succeed
Libra has a small chance of success if it can find the right scenarios to focus. These scenarios are going to be small and limited. This way, it can get the most important stakeholders to cooperate.
Libra success will be a net positive for the cryptocurrency space.