People know that their financial transactions leave a trail, but they can rest assured that this information is only accessible by strictly regulated companies and national authorities. Even for those who remain skeptical of the sanctity of their financial identities, cryptocurrencies like Bitcoin have recently offered them decentralized payment networks more conducive to anonymity. But just 7% of internet users globally say they’re currently invested in at least one of the countless coins available.
Currency is typically defined as a medium of exchange for goods and services, but any cryptocurrency owner is extremely unlikely to start using their crypto-coins to purchase everyday items. Most retailers don’t accept them. But even if they could find one, the unpredictable value of their coin renders it impractical for such a purpose compared to government-backed currencies, and they could end up missing out on a lot of money in the process. Even those cryptocurrencies which are pegged to the U.S. dollar do not have a use in everyday transactions.
That’s where Facebook has hoped Libra could change things
At the time of writing, Facebook’s Libra project is in stormy waters, and its future is uncertain. Theoretically, it could make Facebook the first non-state entity in history to introduce a currency directly rivaling government-backed
currencies on the international stage.
This is a big deal.
Some nations, including the U.S. and China, have cited serious concerns over Libra’s impact on their monetary sovereignty. Sharing its namesake origins with the British pound sterling (“£” derives from “L”), Libra’s meaning of “balance” clearly signals Facebook’s self-expressed intention of bringing harmony to the international financial order. Convenience is one of the main weapons in Facebook’s armory – such a currency could seriously improve the cost, speed, and simplicity of money transfers and transactions, and could even improve financial inclusion in underserved areas of the world thanks to
We can see that in a handful of our tracked markets internet users are more likely to have a Facebook account than a bank account, for example.
Don’t make the same mistake as others framing the Libra concept as dystopian. Libra is not operated by Facebook, per se. Facebook is just one of many members of the Libra Association responsible for validating
user transactions, so it doesn’t own or controls that information. It’s also insisted that it won’t share account data between Libra and Facebook and it won’t use the data to target ads, although skeptics have pressed the company for more specific details.
There are many upsides for such a concept.
For example, Facebook could become an important commerce platform and ensure people remain within its ecosystem when they’re purchasing products, just like WeChat does in China. This could pave the way for social commerce to reach similar heights as it has in China, and could even open up online
business models in micropayments thanks a reduction in transaction fees.