On June 18 2019, Facebook announced Libra, its own currency. Its purpose is ostensibly to allow people to make transactions without needing a bank account. A Facebook account is presumably enough. Its stated goal is to make e-commerce and online trading more viable for people who are un- or under-banked. But what will its impact be on the spread of Blockchain technology?
While Facebook doesn’t plan on rolling out the digital currency before 2020, it has received backing from about 30 players across the telecom, online retail, finance and research sectors. These together form the Libra Association.
We should note that Libra isn’t a true cryptocurrency – it will be backed by a basket of real-world currencies that can be traded against it. More importantly, while Libra will use a form of Blockchain technology, it will use a centralized Blockchain variant, not the ‘typical’ peer-to-peer, distributed ledger technology that tech enthusiasts are often fond of.
Making bank with Facebook
At first sight, Facebook’s goals dovetail with the ambitions of Blockchain evangelists. Libra could be an international currency without borders, accessible to everyone (with a Facebook account) from any point with an Internet connection.
But since the Libra Association still controls its own Blockchain, this turns Facebook more into a type of bank that reconciles data from all its participating partners. Bluntly put, Facebook will still run the show. For all its glowing talk of enabling an ‘Internet of Money’ and bringing the benefits of the Blockchain to the masses, its main beneficiary will be itself. This is a pretty far cry from the advantages of decentralization that we’ve discussed here before.
Facebook as a gateway to the Blockchain
This is not to say the Libra Association is dishonest or has bad intentions. It would be naïve to believe Facebook would invest billions of dollars in a project that wouldn’t gain them anything. However, given the company’s track record on privacy, security and data management, it would not be unwise to remain skeptical until Libra is actually launched.
Second, while Libra’s use of the Blockchain is limited in scope in its currently foreseeable future, it could bring the Blockchain to the attention of the masses. This is a good thing. Computer purists long derided Windows computers of the late ‘80s and the ‘90s as poorly developed and unsecure, but these computers did help an entire new generation become computer-literate.
The ‘free’ Blockchains will be waiting
Since no one controls Blockchain technology as such, more ambitious, safer and privacy-oriented Blockchain applications will continue to come out. Technology giants will also try to continue to leverage the Blockchain for their own ends or attempt to dominate the popular conversation, but even current-day applications of the Blockchain are already too numerous and decentralized to be neatly put back into a box.
Another positive consequence is that Blockchain (and cryptocurrency) ideas will be able to reach markets and regions where their potential is vastly unexplored. Facebook reaches over 2.5 billion people, including nations with fledgling Internet access in South-East Asia and Africa. If the next Blockchain genius hails from there, perhaps it is Libra that could give them the impulse to start thinking.
“How about me?”
How will Libra impact your life? Is it a platform you should take into account when thinking of Blockchain or cryptocurrency projects? Should your e-commerce division or your cyber security plans await Facebook’s next move in this area?
There is no cut-and-dry answer to those questions because so much depends on your position and on future developments, but giving them serious thought is a start. Since we are very close followers of all the latest goings-on in the Blockchain community around the world, we’d like to think with you. Let’s have a conversation – perhaps we could help you on your way to answer your questions and offer you some guidance.