Facebook, the world’s leading social media platform, recently announced its venture into the cryptocurrency industry with the introduction of Libra cryptocurrency project. According to the Facebook white paper, the “mass-market usage of existing blockchains and cryptocurrencies has been hindered by their volatility and lack of scalability, which have, so far, made them poor stores of value and mediums of exchange.”

The white paper outlines the different aspects of the Libra project, including how the currency is funded, the underlying blockchain use, the programming language, as well as the organizational plans.

The news prompted numerous reactions across the world and in Asia. In China, the most populous nation in the world, the news put them in a strange position. The country has a thriving crypto community, with many major players in the industry from there. Yet, Facebook is banned and maybe by extension Libra will also be outlawed. 

Excitement about the prospects for the wider crypto community was clear in the various reactions. Yet, many analysts are worried as to where this left China and its crypto community in the digital money race. Will Facebook and other western powers overtake China? Have they lost their chance for dominance in this area in the future? 

 The West is moving ahead of China with Facebook coin

Xiao Lei a writer and big figure within the crypto and blockchain space certainly saw the break out of Libra ahead of a Chinese cryptocurrency as the West moving ahead of China. In his opinion piece for Jinse, he said China has failed to give enough “attention” to cryptocurrencies. 

Media company BlockrhythmnBlockbeats was even clearer in the implications of Libra. Their opinion piece explicitly pointed out the worries for the future with the arrival of Libra’s white paper. The piece said:

“For the Facebook Libra project, Chinese users don’t have to envy at all. In fact, we should be worried from some angles, because the game between the global economic powers will be carried out in the form of digital cryptocurrency. This can be seen from Facebook’s testing in dozens of countries.”

Other writers and opinion pieces bemoaned China’s lack of push for a cryptocurrency. Cai Weide, a Chinese professor of Blockchain and crypto, who has worked around the world said China was “lagging behind” and that they should not underestimate the importance of Libra, an invention that, “is (one of the) major financial technology reforms in the past 500 years”. 

Libra to bring hegemony of the dollar? 

Babbitt columnist, Chen Bo also had an interesting take on the potential effects of the Libra token. In his piece he talked about the effect it will have on fiat currencies. The US dollar is the leading currency in the world, with all countries accepting it and prices for stocks and crypto usually in the US dollar. Its hegemony in the world is clear. 

For Bo, his fear is that the Libra will also further strengthen the US control of financial institutions and the world. Although crypto and digital currency is an alternative to fiat currencies, Facebook’s Libra is a stable coin, so these rules do not apply. According to Bo:

“Facebook’s digital stable currency means that the dollar credit is directly introduced into the blockchain world and becomes the pricing basis for global digital credit. In other words, digital credit will become an extension of dollar credit. This is in line with the fact that oil is priced in dollars.”

Not only that, but the fact that Libra will be regulated primarily by the US this also gives them, “indirect jurisdiction over digital currencies.” Essentially, the US will, directly or indirectly, hold the power in the new digital currency age. This is something that should no doubt worry China and other major superpowers. 

Although it will not be played out today, perhaps in fifty or 100 years, historians will look back at China’s inaction and point to this among other things as to why the US continued to dominate the world.