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Facebook unveiled its plans for Libra, the new cryptocurrency that could change the future of global payments. Here’s everything you need to know about it.
Facebook has rolled out its ambitious plans for a new currency and financial infrastructure that could make our transactions easier. Libra is a new type of cryptocurrency that will allow you to make purchases and send money online with almost zero fees. The idea is to provide fast and reliable transactions with the option to hide your identity while exchanging from your local currency to use Facebook’s Calibra wallet.
In Facebook’s own words, they are aiming to “reinvent money, transform the global economy so that people everywhere can live better lives.”
What you need to know about Libra
Facebook has released an extensive white paper with all the details about Libra that you can access here. However, if you want a recap of the features that are more interesting from a marketer’s perspective, this is what you need to know.
An introduction to Libra
Facebook is introducing a new currency called Libra. You are able to exchange from your local currency to buy Libra. You can use Libra online to make purchases or send money all over the world without delays or big fees. The fees will be almost to zero and you will be able to use Libra both in third-party wallet apps and also in Facebook’s Calibra wallet that will be available through WhatsApp and Messenger.
How does it work
Libra is similar to other cryptocurrencies in the sense of having the ability to exchange currency without revealing your identity. It is more centralized though as it is governed by the 28 organisations who form the Libra Association. The initial founding members of the Association include Facebook, Paypal, Mastercard, eBay, Spotify, Vodafone and others and the goal is to have 100 founding members before they go public.
The idea is to improve online transactions in a stable, fast, scalable, but also a secure way.
Is it safe?
Security is important for Facebook as they seem to understand that there is a current level of mistrust from the users towards the company. That’s why the messaging is clear that Libra won’t be just easy and fast but also secure in the transactions.
According to Facebook:
Calibra will have strong protections in place to keep your money and your information safe. We’ll be using all the same verification and anti-fraud processes that banks and credit cards use, and we’ll have automated systems that will proactively monitor activity to detect and prevent fraudulent behavior. We’ll also offer dedicated live support to help if you lose your phone or your password — and if someone fraudulently gains access to your account and you lose some Libra as a result, we’ll offer you a refund.
It will be built on a blockchain designed with security in mind with Zuckerberg reassuring us that our data will be safe. In his own words in his Facebook post,
By default, Facebook won’t import your contacts or any of your profile information, but may ask if you wish to do so. It also won’t share any of your transaction data back to Facebook, so it won’t be used to target you with ads, rank your News Feed, or otherwise earn Facebook money directly. Data will only be shared in specific instances in anonymized ways for research or adoption measurement, for hunting down fraudsters or due to a request from law enforcement. And you don’t even need a Facebook or WhatsApp account to sign up for Calibra or to use Libra.
“We realize people don’t want their social data and financial data commingled,” says Marcus, who’s now head of Calibra. “The reality is we’ll have plenty of wallets that will compete with us and many of them will not be in social, and if we want to successfully win people’s trust, we have to make sure the data will be separated.”
When is it happening?
Facebook is aiming to launch Libra early in 2020 but there are no further details for the next steps for the time being.
Why is Facebook interested in cryptocurrency?
Facebook is ambitious enough to test the idea of creating a new currency that could make the social media platform even more powerful. As they’re mentioning in Libra’s site, they want to help 1.7 billion adults who remain outside a financial system while also helping those who seek improved financial transactions at a global level.
The goal is to encourage more people and business owners to switch to Libra for their online transactions to keep them engaged in Facebook’s ecosystem.
How businesses can benefit from Libra
Libra can be a great opportunity for businesses of all sizes to expand their client base. Facebook’s goal is to bring customers closer to businesses across the world in an improved way that feels easier, stable and more secure.
For example, a small business can reach a wider audience by accepting payments all over the world. They can also improve the checkout process by making the transactions easier. Another key issue is the stability that Facebook is promising that could improve the state of e-commerce as part of its family of apps (Facebook, Instagram, Messenger, WhatsApp, etc)
Facebook is the most powerful social media platform in the world and the ability to set up a new currency system makes it very appealing for businesses that want to make the most of social media.
It might be too early yet to predict the outcome of this venture, but it feels like a great time to start thinking of what the next year could look like and how the new form of payment could look like for your business.
The rising concerns about Libra
It is still too early to make any certain predictions on the future of Facebook’s new venture. However, there are currently many concerns over the privacy and the security of such an idea. Both individuals and companies might be worried about the possibility of Facebook gaining even greater control over our data and financial activity.
Mark Zuckerberg mentioned about this:
“It’s available to anyone with an internet connection and has low fees and costs. And it’s secured by cryptography which helps keep your money safe. This is an important part of our vision for a privacy-focused social platform — where you can interact in all the ways you’d want privately, from messaging to secure payments.”
It should be interesting to find out more details about the next steps and what we should expect from it.
Experts react to this announcement
We’ve read many interesting thoughts about Facebook’s Libra and what it could mean for a business or a marketer.
Mateusz Tilewski, CTO of Concordium, commented:
“With some of the world’s biggest payment giants such as Mastercard, Visa, PayPal and Stripe on the consortium of companies governing Facebook’s bespoke cryptocurrency, and with its coin due to be pegged to government-issued cryptocurrencies, this development is bound to transform the way international transactions are carried out. This development is especially interesting in light of the FATF announcing that it will impose new rules for virtual asset service providers (VASPs), with regulatory compliance set to be at the top of Facebook’s agenda.
While detractors may claim that Facebook is trying to create a new stream of revenue amidst its net profit falling 51 percent year-on-year, it has an enormous reach of 2.38 billion monthly active users which will undoubtedly help with the mainstream adoption of cryptocurrencies and will see other big players moving into the space.”
According to Tara Annison, Technical Product Manager at the PR9 Network, Facebook’s announcement highlights the increasing focus in the blockchain industry.
“The introduction of Libra shows that a wide range of players across the blockchain and traditional finance/tech space are interested in blockchain technology and its potential. The Libra foundation has stated that they think blockchain is a powerful tool for improving financial inclusion and it will be interesting to see how they shape the product offering around this, especially regarding the user experience. They have also developed their own blockchain and are using Move as the programming language, so it will be exciting to see if this sparks other innovations in the space and other companies exploring their open source technology.
Within the Libra whitepaper, the focus is very clearly on improving financial inclusion and the prevalence of mobile technology in many of these regions. Therefore, I would expect a mobile-first offering which takes advantage of the user experience expertise many of these companies have. The ability for users to understand the offering and be able to easily purchase and trade Libra will be pivotal in the success of the project.”
Finally, for Jehan Chu, Co-founder of Social Alpha Foundation and Managing Partner at Kenetic, Libra can bring a fresh air for the industry.
“While critics bemoan the centralized nature of Facebook’s crypto, I believe it is an enormously positive driver that will accelerate crypto into mainstream consciousness and adoption, and provide further capital and opportunities for fully decentralized blockchains like bitcoin and ethereum and the startups that build on them.”