Facebook crypto chief defends Libra project amid claims the corporate has an excessive amount of power

A bit more than two weeks after announcing plans for a cryptocurrency known as Libra, Facebook’s top executive on the project is reiterating that the corporate won’t be in control of it.

“Facebook won’t management the network, the currency, or the reserve backing it,” wrote David Marcus, the head of the company’s blockchain group, in a blog post on Wednesday.

“Facebook can only be one among over 100 members of the Libra Association by launch. We will not have any special rights or privileges.”

Marcus also explained that Facebook’s wallet for Libra, known as Calibra, will be just one of many wallets, however admitted that Facebook will gain business advantages overall from making it easier for people to use Facebook services to transfer money.

The need to reiterate these points after only two weeks suggests Facebook will have an uphill battle getting individuals to trust it with something so sensitive as their finances.

It additionally highlights a basic contradiction in the project: whereas Facebook designed Libra under great secrecy and oversaw its announcement, the corporate intends to turn management over the cryptocurrency to a body of partners. At launch, those partners included non-profits, credit card companies and payment brokers, among others, however up to now major financial institutions have stayed away. The transition of control might not be successful if Facebook can’t convince partners there’s a reason to join.

It’s also not immediately obvious why Facebook undertook the ambitious project of designing a completely new digital currency, instead of simply creating a payment system that works in conjunction with Facebook merchandise. There are many other examples of tech corporations facilitating payments, like Apple Pay and PayPal’s Venmo, that allow individuals transfer cash electronically without requiring them to convert it to and from a new kind of currency.

Marcus addressed this by saying that Libra’s great promise is to assist those who are poorly served by the current banking system, particularly those in developing countries.

“With Libra, anyone with a $40 smartphone and connectivity will have the flexibility to securely safeguard their assets, access the globe economy, transact at a much lower price, and over time access an entire range of financial services,” he wrote. “We firmly believe that if Libra is successful, it can be a non-linear step change for billions of individuals who need it the most.”

The novelty and ambition of the concept doesn’t appear to be discouraging investors: Facebook stock is up regarding 4-dimensional since the corporate announced Libra.