Hedera Hashgraph adds IBM, Tata Communications to council as Facebook Libra stalls
A cryptocurrency that's too big to fail can't be allowed to succeed.
Shortly after Facebook's Libra formally hit the airwaves, Hedera took out a full page ad in the Wall Street Journal, thanking Facebook and saying imitation is the sincerest form of flattery.
— Jordan Fried (@jordanfried) June 22, 2019
The imitation it's referring to is the use of a multi-industry governing council of large, established businesses, including some competitors in a (potentially somewhat naive) effort to prevent cartel behaviour in the council.
Libra's under-construction council includes Facebook itself as the creator as well as mostly American household names such as Mastercard, Visa, Uber, Lyft, PayPal, Stripe and more.
Hashgraph's council includes the Swirlds itself as the creator, plus global names including Deutsche Telekom, DLA Piper, Nomura Holdings, Swisscom Blockchain and Magazine Luiza. And today it has announced that IBM and Tata Communications are also among its members.
"The addition of IBM and Tata Communications to the Hedera Governing Council is a powerful endorsement of the hashgraph consensus mechanism, and further decentralises the governance of Hedera Hashgraph," says Hedera Hashgraph CEO Mance Harmon.
Facebook aims to have 100 council members before launch, while Hashgraph is aiming for up to 39.
Beyond just having a governing council, Facebook doesn't really have any fixed governance system for those 100 members yet, and is more or less just winging it, while Hashgraph has inked term limits and other fine details into its governance model.
"Our governance model, which includes a robust system of checks and balances, ensures power can't be consolidated, while at the same time providing a stable and scalable platform on which developers can build," Harmon adds.
And Facebook's Libra appears to be losing momentum as it flails its way through a web of regulatory scepticism, while Hashgraph is still growing and adding new members to its governing council.
Facebook has warned investors that Libra may never launch – in line with its legal obligations to state the obvious.
Libra has faced pressure from central banks that are worried about new competition, from lawmakers who are concerned it may be used to facilitate illicit transactions and, most of all, from people who just don't trust Facebook and don't want it to do this.
"Is there anything experts can say which would convince you and Facebook to not launch this currency?" US Senator Sherrod Brown asked Facebook Libra representative David Marcus during an extensive grilling session.
Meanwhile, UK, Canadian, Australian and European Union data privacy bodies have jointly agreed that they are officially not cool with Libra until they get some more concrete reassurances.
The simple fact, say researchers from the University of New South Wales, is that you can't launch Libra until regulators approve, but regulators won't be in a position to approve for many years, during which there's plenty of time for something to steal Libra's place.
Given its scope and potential impacts, "worldwide monetary and financial regulators will have no choice but to regulate Libra," say researchers from the University of New South Wales. Unfortunately, "cross-border supervisory cooperation and co-supervision schemes are patchy, and little tested for financial services, beyond banking and derivatives.
"Establishing new multilateral systems, however, will take much longer than Libra will need to get operational and are unlikely in any given current geopolitical trends. Libra throws down the gauntlet to the major international regulators and challenges them to move with unprecedented speed and cooperation – we expect a genuine attempt to meet this challenge will be accompanied by some regulatory roadblocks to slow Libra’s development and buy the regulatory community some more time within which to respond comprehensively."
Libra has triggered more crypto discussion and regulatory movement than any other cryptocurrency development yet, but at this rate, it won't be the main beneficiary of the developments it's creating. The cryptocurrencies currently sliding under the radar, and those yet to come, might benefit from Libra the most.
Disclosure: The author holds BNB and BTC at the time of writing.
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