The Breakdown - BREAKING: Is The Libra Dream Dead? Visa, Mastercard, Stripe, eBay leave Libra

Episode Date: October 11, 2019

The title says it all. Visa, Mastercard, eBay, and Stripe have joined PayPal in leaving the Libra Association. Is this the death knell for the project? Will the rest of the organizations follow suit and leave? Or does this provide a chance to Libra to shift the narrative and arise like a phoenix? Let's dig in.  Youtube: https://www.youtube.com/nathanielwhittemorecrypto

Welcome back to another Crypto Daily 3 at 3. What's going on, guys? I got to tell you, for a while I was thinking about not doing a 3 at 3 today. It was quiet for a minute there. It's Friday, October 11th, by the way, for those of you who are listening. Yeah, it was quiet, quiet, quiet. I could have just gone into more of the news and recapping DevCon and stuff. But I was like, you know, maybe people don't want to talk today.

But then the Friday afternoon news dump happened. One of my favorite shows growing up was West Wing, and they had a whole episode about the Friday news dump and taking out the trash, and boy, oh, boy, did that happen today. So just about an hour ago, I saw on Joe, the stalwart's thread here, eBay to exit Facebook's Libra cryptocurrency, Stripe to exit Libra's Facebook Libra cryptocurrency. MasterCard is set to exit Facebook's Libra Cryptocurrency.

And later we would get one more visa is also leaving. So that's five partners if you include PayPal last week. So obviously bad, bad news for Facebook, right? So let's talk about a little bit about the context. Obviously, Libra Association announced itself. They had all these banner partners. Part of the whole idea was that the existing financial infrastructure would be kind of bought in. and, you know, this is a real group effort in some ways, right? This is about the creation of a new system together that benefits more people, right? It's not trying to recreate things in ways that just enriched Facebook. And a lot of that was hung on this association.

What's more, the association was meant to provide backstop against Zuckerberg, just asserting control and being able to be his own country and print money. And so this is a pretty big deal, obviously, to not have those companies involved. Now, this follows. If you go back to not this Monday, but the previous Monday, rumors started in the Wall Street Journal that many of these partners were getting uneasy. And these rumors have been around for a while, but the Wall Street Journal report renewed that worry. David Marcus came out with a tweet thread. It was like four tweets that basically created a narrative framework for if this happened, where he effectively said that this is a really big, disruptive thing. And the thing that matters most is people who are mission aligned. So he created this framework of this heuristic of mission alignment that felt like he could come back to if he had to in this context. So then from there on Friday, around this time in the afternoon, we got news that the PayPal would be leaving. So, you know, it wasn't the companies that had been listed in that Wall Street Journal report, but PayPal did leave. It was the first banner defection.

And then today, obviously, we saw all these new folks go. Now, an interesting additional part of this story is that earlier in this week, Sherrod Brown and Brian blanking on his name, but the Democratic senator from Hawaii, had sent letters to the CEOs of Visa, Stripe, and MasterCard saying that they should get out of the Libre Association. And what a potentially scary thing it was. And so two of those three, or three of those three have now done so. So good job. Democratic senators for doing that. You won on that front, I guess. But the, the, the question I guess is like, what, like why it matters. So there's one one thing that I wanted to reference. I didn't bring it up, but Bruce Fenton kind of made a comment about what a shame it was that government pressure can do this. He says, Maxine Waters, who I guarantee could not explain the first thing about financial tech or blockchains and her cronies in Congress have succeeded in and getting some of the most profitable, popular, and innovative companies to leave the Libra project

before it ever started. Terrible. I tend to agree with this. I think that killing things before they're born, especially because Zuckerberg had literally agreed to come testify on next, not next week, but the week after, October 23rd is a damn shame. But I think there is a question of like, what's the actual fallout. So here's what I had to say about it. I said, Stripe MasterCard and eBay have joined PayPal and leaving the Libra Association. What matters most is what happens next. If it starts a cascade of dominoes of organizations leaving, it's probably over. If instead remaining members come out strong, it's game on. So here's my thinking. There is an argument, I believe, that Facebook can make that this is an old set of actors. Stripe makes this a little bit harder, but let's go with it. It's the old financial guard who don't really, have an incentive or an interest in a new system that's more equitable and is more fair and has lower profit in general coming into existence, right? They want the old world to persist. They make tons of money off of the system as it exists. The people are unbanked and kind of left out of the

system because they're not profitable enough for that system. I believe that Facebook could cogently, coherently make that argument. And to the extent that there is a rally around the flag effect where the other members come out strongly and say, no, we think it's important, we're going to stay here. Maybe this is a situation that's kind of like a, that which does not kill us makes us stronger, where it actually, they go into those hearings, being able to kind of have survived the first wave of defections. Now, there's a counterpoint to that. Someone makes down in the comments, I don't know where it is, but basically someone said that the, oh, yeah, Wizard of Oz, the two largest tap and go ramps departing, B, San MasterCard or the DeathMouth.

Everyone else departing is just timing. So basically, that's the practical technological realities of those terminals, right? Where cards are accepted is a big deal. So maybe it's not just signaling. Errington, Michael Arrington, had kind of similar comments or thoughts as I did. He says nearly everyone bailing on Libra. It's not great PR, but none of these partners actually matter much. If Lever survives the next month, it's probably going to launch.

So I think this is kind of similar idea. Like, does this start a mass chain of defections or are there a whole new set of partners? Ryan Todd from the block says maybe Monday should be interesting. Payment companies backing out definitely hurts, but if there are a thousand other entities interested, they should at least get some official commitments. He said in a different tweet, who said it's going down? $1,500 interested in the next cohort sounds healthy. Selkis says Q shot in Freuda, I for one will be very disappointed if Facebook and Libra goes down this early.

We need them as a leadbacker for a much larger play. If you don't understand that, you're not thinking hard enough. That was earlier. That was Q's commenting on PayPal. And then maybe the most savage thing that I saw was a rhythm trader over here who says, this is from June 18th. Dollar is the currency of the state. Libra is the currency of the corporations. Bitcoin is the currency of the people.

You follow that up today, retweeting it with saying Libra was star the currency of the corporations, which is just absolutely savage. But, you know, I think that a couple things. One, I've in general felt that Facebook had to anticipate a huge amount of regulatory backlash and just social pressure on them as well. I don't know, it's hard to say whether they would have anticipated that these banner partners, especially the all of them, would actually drop out in this way. I think that the, the path was always going to be hard for this for Libra, given just where Facebook exists right now

in the regulatory space. It's kind of toxic, right? And that's why they insisted that Zuckerberg come. And yeah, I mean, Libra has poked every bear that can be poked. in the realm of digital currency and the future of money in a way that I don't think that anyone would have anticipated just how big a deal, how big a narrative, how big a story this is going to be. It's a question now of whether this is just the latest chapter in that story or whether we look back and say this was the moment that it actually turned officially, right? So I don't know. What do you guys think?

I just wanted to do a short one. Like I said, I was thinking about even kind of just skipping today for lack of significant news, but this is about as significant as it gets. So let me know. What do you think? Is Libra just stillborn? Is it dead? Is it done?

Is it now the underdog? Can we root for them? What's the deal with Libra? What is your prediction, moreover? Let me know, and we'll talk about it more. All right, guys. Have a great weekend. Thanks for listening.

Thanks for watching. And I will see you on Monday. Peace.