In an attempt at financial inclusion, Facebook is launching its very own stablecoin: Libra. Over 30% of the entire world population does not have access to a bank account and hence cannot benefit from the advantages offered by the banking system that developed country residents take for granted. The social media giant might be the perfect candidate as it has a very large global reach. Facebook has more than 2.3 billion active monthly users and their plan is “Just as people can use their phones to message friends anywhere in the world today, with Libra, the same can be done with money — instantly, securely and at low cost”.
Multiple projects have joined Facebook’s journey by becoming founding members of the Libra Association and offer additional geographic and clientele diversification. Among others, the members include Mastercard, Visa, PayPal, eBay, Spotify, Uber and Coinbase. All founding members will help grow the ecosystem and represent the final decision-making authority. Nonetheless, Facebook will maintain the role of the leader until the stablecoin-based project is finally launched in the first half of 2020.
According to project Libra’s whitepaper, the asset is built on a “secure, scalable and reliable blockchain” that will be open-source and hence open to anyone to build products on top of it. As a stablecoin, it is backed by a combination of bank deposits and short-term government securities to give it intrinsic value, which according to the whitepaper is something many cryptocurrencies lack. A major concern from the public is how will their data be protected. As Facebook suffered from negative media attention in regards to its data-sharing practices, they created a regulated subsidiary, Calibra, to “ensure separation between social and financial data”.
It remains a mystery as to how the unbanked will buy Libra, as they usually do not have access to debit or credit cards. However, we do know a wallet will be integrated into Facebook Messenger and WhatsApp to help provide quick access to financial transactions. The wallet will also be available as a standalone app.
As far as the cryptocurrency ecosystem is concerned, Facebook’s new venture might accelerate retail adoption of existing and future crypto-assets. From a more global perspective, Binance speculates these can be some of the long term implications:
“Reshaping of the payment industry New offerings of financial services Advancing greater freedom of money and lowering capital restrictions worldwide un-dollarisation of the world”.
Image courtesy of Calibra website