Last month, Facebook made headlines when they announced their plans for Calibra. Calibra is a new subsidiary of Facebook that focuses on financial services. Their goal shall revolve around the utilization of a new digital currency, powered by blockchain, called Libra. Calibra will first introduce a digital wallet and is expected to launch in 2020. This announcement from Facebook has received mixed reaction from both the crypto and mainstream media.
Despite the split opinions, there seems to be a consensus that Facebook can very well pave the way to global adoption of blockchain technology. The reason behind the consensus is that Facebook has more than 30% of the entire world’s population or 2.38 billion people as its users. As for the rest of the population, it is simply down to two key things on why they do not possess a Facebook account: no access to internet connection or freedom of choice.
Backed by a reserve of various assets designed to give it intrinsic value, it is governed by the independent Libra Association tasked with evolving the ecosystem. Members of the Libra Association consist of geographically distributed and diverse businesses, nonprofit and multilateral organizations, and academic institutions. Founding members include Mastercard, PayPal, Stripe, Visa, eBay, Facebook, Lyft, Uber, Spotify, Andreessen Horowitz, Vodafone Group, Kiva, Mercy Corps, Women’s World Banking and more.
Let’s explore a little further.
What is Libra?
Libra is first and foremost, a cryptocurrency created to let people access and participate in the Libra Network. Users shall be able to exchange fiat currency into these digital currencies and use them in online transactions.
The digital coin is essentially a stable coin as it is pegged to government-issued currencies such as USD, EUR, SGD, etc. Many decentralized cryptocurrencies like Bitcoin or Ethereum, are volatile in its valuation. Facebook seeks to create a more stable cryptocurrency to encourage it as a means of facilitating ordinary online consumer transactions.
Traditionally, to make financial transactions, one has to go through banks or what is available today as online money transfers such as PayPal, Transferwise, and many more. However, it is important to note that existing financial systems today are of their own technology. For the sake of being brief, what makes Libra special as compared to other financial systems, is that it is powered by the blockchain.
How Facebook plans on mass adoption?
An article by WIRED discussed how hard it is for modern-day individuals to escape being exposed to Facebook. The social media network has become so dominant until it still affects those who do not own an account. Parents have revealed that Facebook is an essential part of family life and is used to keep distant relatives informed. Therefore, it is undoubtedly an entity that has been integrated into the daily lives of the common people.
A survey was conducted by LendEDU with 1,000 adult Americans and has garnered interesting results. The participants were asked if they had invested or were currently invested in Cryptocurrencies and 91% or 910 people have answered “No”. 18% of these 910 answered “Yes” when asked if they would be interested in investing in Facebook’s Cryptocurrency and out of that number, 57% chose to do so because they trust companies like Facebook to deliver a reliable product.
Libra as payments
At first, Libra will only be available in the Facebook messenger app and WhatsApp. With the other partners in the Libra Association, it is accepted that those companies will find ways to integrate Libra payments.
Real-world Fiat to Crypto conversion
According to The Verge, Facebook is also planning to install ATM-like terminals for people to manage their Libra coins while out and about. Eventually, it is planned to have shopping outlets accepting Libra as a form of payment.
What is next for Libra?
If the question here is about global “Blockchain” adoption, then yes, Facebook is a brand that is widely known in the world. The success of Libra can become the main driver of blockchain technology adoption in the general population. In addition to that, their partners will be invaluable in legitimizing blockchain technology as an innovation to be adopted by most, if not all, businesses dealing with intermediaries.
That is blockchain technology, but what about Bitcoin adoption? Interestingly, the price of Bitcoin has soared from $9,000 to $12,000 since Libra’s unveiling. The philosophy behind Bitcoin is, in my opinion, unbreakable. Bitcoin is not backed by cash and government bonds like Libra. What gives Bitcoin value is the trust in its system. Libra does not represent the true nature of decentralization — the ideology that makes Bitcoin desirable. Could Libra also drag Bitcoin into mass adoption?