advertisement
advertisement
advertisement

Western Union stock tanks after Facebook unveils Libra cryptocurrency

Western Union stock tanks after Facebook unveils Libra cryptocurrency
[Photo: Mark Finn/Unsplash]

This morning, Facebook finally went public with its big blockchain plans. Its new project, called Libra, is absolutely ambitious and, like all things Facebook, has the distinct possibility of taking a dark turn. But never mind all that because cryptocurrency enthusiasts are likely thrilled; one of the most powerful tech companies in the world is partnering with dozens (potentially hundreds) of other business titans to create a digital currency built atop the blockchain.

Libra positions itself as doing what bitcoin said it was always supposed to do. It’s a borderless financial system intended to let anyone (with a government ID) have a simulacrum of a bank account. They would supposedly be able to make purchases at stores, buy items online, and transfer money to family and friends.

That last part may be affecting others in the industry. Shares of Western Union this morning dropped over 3% from their closing price last night. (They’ve since gone up a little, but are still down over 2%.) The Libra news is just one of many industry updates that could create more competition for players like Western Union. Yesterday, Ripple—another cryptocurrency company—announced it was buying a $50 million stake in MoneyGram. Put together, Western Union is seeing multiple layers of pressure in the cross-border payments space, and investors may be worrying.

At the same time, it’s still extremely early to divine how Facebook’s Libra will play out. The company has launched many a program met with fanfare that ultimately sputtered and died. While Facebook does have a few big names at its side for this launch—including PayPal, Visa, Mastercard, Uber, Spotify, and others—there are a few notable omissions that could prove to be huge hurdles. Apple, Amazon, and Google are not listed as “founding members” in Libra’s white paper, for example. Neither are any banks. As FT Alphaville points out:

Don’t presume the presence of the more successful payment incumbents necessarily means their interests are aligned with those of Facebook. $10m isn’t too hefty a price tag for insider information about what Facebook is planning and/or a vote at the table when the time comes to sabotage the system. Everyone else of any note is either a loss-leading company yet to make a profit, a VC, a blockchain company, or an actual non-profit.

Which is to say that we should treat this update with a lot of skepticism, even if it is already having a market impact. We’ll be keeping an eye out to see how others respond, too.

advertisement
advertisement