Just when you thought the cryptocurrency trend was dying down and you could stop stressing about not only having enough money, but now what kind of money, Facebook throws us a curveball.
On June 18, 2019 Facebook announced it will be launching their own cryptocurrency called Libra. This new currency is built on blockchain technology like all other cryptocurrencies we’ve seen sprouting up in the last few years, but Libra has one major difference. Facebook’s cryptocurrency will be backed by a reserve-bank, making it much less volatile and risky as it’s competitor currencies.
Why it WILL catch on
Hefty partners
Facebook had partnered with big brands to make this happen. Mastercard, Visa, PayPal, Spotify, Andreessen Horowitz, and Uber are all financial supporters. For anyone worried about the validity of a social media network branching into finance, these collaborators should put their worries to rest.
Monetary incentives to accept and use Libra
Although the ins and outs of the monetary incentives are still unclear, there are speculations that Facebook will leverage their advertisements to get the ball rolling.
Merchants who use Libra to advertise will be rewarded with tokens to be used towards more Facebook advertisement. Consumers who pay with Libra may potentially be rewarded for engaging with post and advertisements.
Facebook: trusted evil
Benefits
Facebook is used globally by almost everyone that has access to a computer. Their 2.3 billion users will receive information about Libra and be encouraged to use it through its founding platform. This gives it the potential to be a universal currency, adopted by people all over the world.
Privacy and security expert and Facebook’s former Chief Privacy Officer Chris Kelly says Facebook’s greatest purpose has always been to bring people together—”Facebook is about community. It is about providing an online way for people to communicate with their friends and to meet new ones who are part of their real-world community.” By creating a global currency Facebook will only make our global community tighter-knit.
Concerns
Possibly one of the biggest hurdles will not only be protecting the privacy and security of Libra users but also convincing people that this is actually happening. With recent privacy issues and Facebook’s congressional hearing, the public’s trust in the social media network is at an all-time low. However, this really didn’t change user behavior or drop the amount of users. For this reason, Facebook is confident it will be able to move past their breach in consumer trust.
Kelly says the company has always “work[ed] very hard at providing technological protections for our users. That’s why we haven’t seen the type of safety incidents on Facebook we have seen on many other sites.” Despite their latest privacy issue, Facebook has created a far safer environment than other online social networks to protect against identity theft and “catfishing” predators.
Taking the role of a government
Benefits
In areas of the world where the government can’t provide a stable economy, it will provide a safer, more secure form of currency people can rely on. Because it will be backed by a reserve-bank, its consumers can count on Libra’s stability.
Cryptocurrency, in general, can help immigrant families who need to send money to their family members in foreign countries. “The transaction costs on those transfers add up to $25 billion a year, according to Facebook.” Giving immigrants a trustworthy cryptocurrency will ease this financial burden.
Concerns
Since we’ve never seen a company take on this financial role that is generally reserved for the government, we can’t foresee how it will play out. However, a major concern is giving a public company that must report to shareholders access to the public’s bank accounts. If push comes to shove, will loyalty lie with the seats on the board or with its customers?
