The winner who finally reaches the finish line is sometimes not the earliest person to leave.

Editor’s note: This article is from WeChat public account “Suning Fortune Information” ( ID: Suning WealthInsights), author Liu Shiyu.

I remembered that Facebook, the largest social networking company in the United States, led the Libra Coin (Libra) led by the Libra Coin Alliance (composed of more than 20 companies) in June this year. Its white paper claims that Libra’s mission is to establish a set of Simple, borderless currencies, and financial infrastructure for billions of people, with the goal of becoming a global digital native currency.

However, the seemingly beautiful Libra coin program suffered a huge “backward crisis” in October – following the announcement of PayPal’s withdrawal from the Libra Currency Alliance on October 4, within a few hours of October 12 American e-commerce giant eBay, mobile payment company Stripe, Latin American payment service provider Mercado Pago and the world’s two major credit card payment service providers Visa and Mastercard have successively indicated that they will withdraw from the alliance.

As a result, only 28 of the 28 member companies at the beginning of the establishment are still holding on. What’s even worse is that after the retreat of the Libra Currency Alliance, which developed Libra Coin as an efficient multinational payment method, on October 12th, its strong lineup in the payment field was almost gone. The remaining one-of-a-kind payment service provider, PayU, remains within the organization.

Under this heavy impact, the Libra Currency Alliance seems to be farther away from its original goal. This can not help but cause us to think, what is the reason for the payment giants to queue out of the league?

The author believes that the main reasons are as follows:

1, Libracoin has a competitive relationship with payment service providers

One of the plans of the Libra Currency Alliance is to establish a global currency system that is stable in value and as a means of efficient payment across borders.

From this perspective, Libra coins, which are digital currencies, are more similar to payment methods such as Alipay or WeChat payment than traditional encrypted digital currencies such as Bitcoin, Litecoin, and Ethereum. In order to realize its ambitions in the payment field, Libra coins are relying on payment giants such as PayPal, Visa and Mastercard.

We take PayPal as an example. PayPal is one of the successful third-party payment service providers in Europe, America and the world. In 2018, it helped users to make nearly 9.9 billion payment transactions, and the payment amount reached an astonishing 5784 billion US dollars, about 4 trillion yuan, thisThe figures exceed the total GDP of Switzerland for the full year of 2018.

The Libra Currency Alliance is not difficult to imagine for the future – using the payment network established by PayPal online and offline, helping the use of the Libra currency to bloom everywhere, and then step by step through the cooperative drainage, gradually carrying the PayPal The huge amount of payment is transferred to your own hands. In this way, the Libra Currency Alliance not only saves the promotion cost of the sky-high price, but also earns the full amount of the fee by collecting the transaction fee.

However, such a way of profiting is probably the core reason for the disagreement between the payment giants and the alliance. As the third-party payment market in Europe and America approaches saturation, it is more and more difficult to develop incremental markets. One of the survival prerequisites for payment service providers such as PayPal is to maintain their own stock market in the payment field. In this context, if the payment giants cooperate with Libra, it is no different than cultivating their competitors in disguise, and even letting the opponents expand their territory in their own territory. By the strong rise of Libra, it is bound to greatly weaken the position of the payment giants in the market, and may even eventually replace them completely, becoming the sole overlord in the payment field. This result must be the last thing that payment service providers have been eager to see for many years.

Of course, the potential competitive pressure is only one aspect. The many accusations from the national officials and central banks that the Libra coin plan has been launched are another important reason for forcing the payment giants to withdraw.

2, Librae coins face many policy obstacles

Since the birth of the Libra coin, the accusations it faced from the traditional economics and even the political circles of various countries have never been interrupted:

On July 11, Fed Chairman Powell publicly stated that Libra Coin will cause a series of problems in terms of privacy, money laundering, consumer protection, financial stability, etc., and the prospects are worrying.

On October 8, European Commission Vice-President East Bromsky said that when it comes to digital currency, Libra will give the euro zone, considering the size of the company behind Libra’s currency and its global background. To systemic risk, he said with a strong statement, “In the future we need to supervise Libra coins at the EU level, especially in terms of investor protection and financial stability.”

In fact, from some perspectives, there seems to be some suspicion about Libra’s accusation in terms of privacy and consumer protection. The real threat to Libra’s traditional economic world lies in its The threat of the coinage rights owned by sovereign states.

French Finance Minister Lemaire pointed to the core of the problem in September. He believes that Libra will lead to the ultimate privatization of the currency, it will replace the weak currency of some countries, and greatly weaken the independence of the countries concerned. sovereignty. Lemaire’s tough call for a fundamental ban on the circulation of Libra in Europe and calls for the introduction of digital currency alternatives endorsed by national sovereignty.

The ambition of Libraco is to build a country without a countryThe monetary system of the world, and it is the feature of no borders that touches the sensitive nerves of governments and central banks.

The establishment of a borderless or super-sovereign monetary system first jeopardizes the sovereign tax interests of sovereign states. From a deeper perspective, the rise or widespread use of Libra coins will also weaken monetary policy. The important policy instruments of central banks intervening in the economy, thus deepening the uncertainty of economic development.

In order to defend their monetary sovereignty and policy independence, governments are likely to introduce strict laws and regulations to limit the development of Libra, and strong supervision will also bring the existing services of the payment giant to a certain extent. A lot of inconvenience, even affecting the user experience, reducing the user’s trust.

In order to obtain self-protection in front of a powerful sovereign force, the payment giants must not be deeply involved in the Libracoin plan, so the policy reasons have become an important promoter of the payment giants to withdraw.

3, paying the ambitions of the giants to enter the Chinese market

Another consideration for the payment giants to withdraw from the Libra Currency Alliance may be their ambition to enter the Chinese market.

Since 2018, China has pledged to increase the degree of openness of the financial industry, especially in terms of transfer clearing and payment, and to relax the access standards of overseas payment institutions.

In the face of such opportunities, payment giants naturally hope to share a share of the vast Chinese payment market. PayPal is the first service provider among them. On September 30th, PayPal acquired Haibo’s payment service company, Guofubao, which was approved by the People’s Bank of China and obtained a RMB payment license to formally enter the Chinese mainland market.

It must be acknowledged that in the context of strict supervision of digital currency in mainland China, the close relationship between PayPal and Libracoin has brought a glimpse of its smooth entry into the Chinese market. And just five days later, PayPal announced its withdrawal from the Libracoin program.

Perhaps that PayPal’s withdrawal from the Libra coin program at such a time point is not only a coincidence in time, but through this action, it shows the Chinese side that it is clearing its boundaries with the digital currency risk and dispels concerns of regulators and the market. As a result, the clear participation in the Chinese payment market competition, compared with Alipay, WeChat, Suning payment and other mainstream third-party payment service providers in China.

PayPal’s first move back to the group has undoubtedly played a role as a leader in the herd effect, which led to the withdrawal of payment giants. We also have reason to believe that the payment giants will also enter the Chinese market one after another, and compete in a more open Chinese financial environment.

From the above analysis, we can see that under the joint efforts of the three elements of potential competition, political supervision, and expansion ambition, the payers finally gave up the Libra coin alliance. The Alliance faced a lot of crises, but did not give up the grand Libra coin plan.

But it is undeniable that the world is full of great soups, and the people who are in the right place are dead. Encrypted digital currency will be an important part of the future world monetary system. The advanced concepts and advanced technologies it represents will gradually replace the dominant position of the traditional currency.

The Libra Currency Alliance is a brave and romantic pioneer in this historical trend. We admire the courage of the first mover, but we must also clearly understand that the road he is on is full of thorns. History tells us that the winners who can finally reach the end are sometimes not the first to leave. Behind the Libra Currency Alliance, we see that the People’s Bank of China will jointly launch China’s own official digital currency in seven months in a few months. Whether the central bank’s digital currency can use the crisis of the Libra Currency Alliance will come to the fore, let us wait and see!