Similarities and differences between Libra and Visa. Let's find out together

Somiglianze e differenze tra Libra e Visa - libra 760x512

Throughout the hype phase that has arisen around Libra's announcement, Facebook has been very adept at shifting attention from one of the main themes that this launch raises. Libra was presented simply as Facebook bitcoin. In reality, with Libra, a new form of payment management organization is being proposed.

By researching the history and technologies of the infrastructures underlying the payment systems, several similarities can be found between Libra and Visa. But it is differences that make change better perceived.

Was Libra inspired by Visa?

It is easy to think that Libra's founders were inspired by the work of Visa founder Dee Hock. He sensed that the problem of transactions between banks was not technological but organizational. When he developed Visa, Hock felt it was crucial that it did not end up in the hands of a few shareholders concerned solely with their interests.

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He devised the system so that users, banks or credit unions would "own" Visa as if they were in a member cooperative. The ownership, in this case, did not imply the right to sell shares, but an irrevocable right of participation to jointly decide the rules of the game and the future of Visa itself.

The stimulus was to create a malleable but lasting payment infrastructure, from which all members would benefit in the long term.

Libra Association

Libra is supported by the Libra Association, a group of members regulated by a collaborative organization similar to that which the first Visa members had. But it reverses Hock's principles. The Libra Association takes care of the ownership and control of its members as it would in a private club. And it is a club with high admission requirements: each member must invest a minimum value of USD 10 million in Libra, or have USD 1 billion in market value, among other criteria.

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Potentially, in the Libra Association, the crème de la crème of global, technological and vulture capitalism, hostile to the control of governments and financial regulators, would meet. Unlike Visa, members don't compete with each other for market share. Instead, they will divide the interest accrued on Libra's reserve fund. In addition, profits are not shared with users, nor is any interest paid on the balance held by users. Being a member of the club also offers the right to vote, once again, similarly to Visa.

But unlike Visa, Libra weighs votes based on the corresponding investment, not participation. This is an undemocratic process, a plutocracy where the richest wins. The initial idea for Libra gave hope for a decentralized and participatory system like what Hock had imagined in his time. But the image that emerges is that of an anti-democratic colossus, managed by a private and exclusive club that serves its owners, not the public good.

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The good news is that the Facebook project could finally push politicians to regularize technology giants, to curb their impact and influence on society.