Facebook likes Crypto | FinBites
What's going on?
Image source: Frederic Legrand - COMEO, Olha Polishchuk, rangizzz, Iurii Stepanov, Koxae Sun - Shutterstock
What does this mean?
Facebook, inspired by the success of Chinese giants like WeChat, wants to create a global financial network – but with its own brand-new currency. Libra is scheduled for launch in 2020 via a new subsidiary and app called Calibra, and Facebook is partnering with over two dozen companies on the project – including payments giants Visa and Mastercard. Keep your friends close…
The group will together be responsible for governing Libra. But the very presence of a governing association goes against the independent blockchain concept central to cryptocurrencies – which may be why Facebook’s founder has been careful to avoid any use of the word.
Why should I care?
For you personally: Brave new bitcoin.
Libra is billed as allowing the world’s 1.7 billion unbanked, two-thirds of whom own a mobile phone, to make cheap instant payments. But Libra could also help cost-swamped Facebook make more money from its apps’ two billion daily users, rewarding them for watching ads and buying directly from partners like Booking.com– while Facebook takes a lucrative cut. Access to transaction data could also prove juicy. But given Facebook’s record on privacy, will anyone trust it with their digital money second time around?
The bigger picture: A new Federal Reserve?
When the US’s central bank was set up a century ago, many worried that effective control of the world’s monetary policy was being ceded to a private organization. There are similar concerns with Libra – only this time, nobody’s getting to vote on it. Facebook says that it’ll keep Libra’s value steady by backing it with billions in real-world currencies. But there’s a risk that this could eventually involve it snapping up most of the world’s foreign exchange trading, and perhaps some government bonds too – with the heightened competition for “safe” investments potentially pushing interest rates even lower. Regulators will be watching closely.
Credits: Finimize. The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products.