I wonder how much of this is companies distancing themselves from Facebook rather than being purely about the cryptocurrency project.
I suspect their involvment was almost more of a "Keep your friends close and your enemies closer" sort of thing. The idea that it's better to be involved than shut out. But if I were them, I would be low-key thrilled that this is falling apart.
Libra is a fake cryptocurrency that the payment processors and governments hoped would help to hold off the cryptocurrencies for a few extra years. It would have allowed the payment processors to continue to profit from transactions and made it practical for governments to control payments and wallets.
They are probably pulling out for two reasons. One, having all of the payment processors involved makes it too obvious that it's not actually a cryptocurrency. Two, it's dead in the water, and to even have a slight hope of reviving it, that association with payment processors needs to go away. If they are able to resurrect it, expect the companies to come back down the line.
Are you actually saying that:
1. The payment processors joined this consortium to AVOID helping crytocurrencies catch on in the mainstream?
2. The payment processors are lying about pulling out. Facebook secretly pushed them out, because Facebook wants to start over with a more "pure" cryptocurrency?
2. My theory is that Visa et al voluntarily left for the time being because they could see that it was not going to work, and especially was not going to work with them sponsoring it. Facebook is never going to try for a real cryptocurrency, the model will stay the same, but if the project has any chance of moving forward (at this point it is a very slim chance) then it needs to disassociate at least temporarily from the payment processors. The technical parts will not actually become decentralized. Just the bad marketing from Visa and friends will go away for awhile.
It seems like there is a strong possibility that this particular project is going to be completely killed though anyway.
One more thing about the "alternative reality". Yes, my worldview is obviously very different from yours. But maybe if you consider carefully you may realize that your worldview may not be 100% accurate in all ways.
I am honestly wondering which audience you think was losing confidence in this project because of Visa et al.
There's worldview, and then there's confidently stating speculative mind-reading as fact.
Like when you say that the true reason behind payment processors and governments backing Libra was to "hold off the cryptocurrencies for a few extra years." Can you source your claim? Or any of your theories? Is this something you just 'know' to be true?
The cryptocurrency community is rife with people describing in exact detail the thinking and motivation of players behind the scenes, but often it turns out to be just "Here's what I am imagining".
But you got your generalization in there so what the heck, here is mine. The mainstream community is rife with people who accept marketing and propaganda as truth, but often it turns out to be just "bullshit" and companies or governments were actually just doing selfish things to help themselves strategically.
I think the main issue is that cryptocurrency still has a few unsolved research & regulatory problems (like how to handle more than 10 TPS, or how to record taxes transparently) before it's ready for mainstream adoption. No big company wants to take the risk that an unsolved research problem may not have a solution, and so they wait and see how the space evolves rather than committing large amounts of resources to it. (Other than FB, who has resources to burn.) If it starts taking off they'll buy a bunch of startups and then start throwing engineers at it; otherwise they risk nothing.
I wager it's the bad press and negative reactions (particularly from European governments) Facebook/Libra have gotten. That's something they possibly didn't anticipate.