The wait is over; the rumors have been put to bed.
On Tuesday, June 18, Facebook finally shared details about Project Libra, the digital currency the social media giant has been working on for the better part of two years.
Due to be officially launched by the middle of next year, the currency will be used for payments across its ecosystem of platforms including Facebook, Messenger, WhatsApp and Instagram. It will also be available for general e-commerce, payments, remittances and much more.
What Will it be Worth?
The details are still a little vague at this point, but Libra is to be a stablecoin backed by a reserve of real world currency holdings that its various partners are to contribute and maintain. Libra is to be pegged to the value of a basket of global currencies including US dollars, British pounds, euros, and Swiss francs.
The coin is also expected to be fully redeemable for fiat currency. In order to maintain its stability, much like existing stablecoins in the crypto space, the foundation’s members will mint units of Libra when required and destroy them as and when they are redeemed for cash.
How Can I Get Some?
When Libra officially launches in mid-2020, it will first be made available on Messenger and WhatsApp. Users will also be able to purchase Libra directly from within the Calibra wallet by connecting their bank accounts to it. Calibra has been set up as separate subsidiary which will allow users to buy, spend and store their Libra holdings.
The digital currency will also be made available through the numerous partners that have come on board, many of which are likely to build compatible wallets of their own.
What’s the Point?
Well, with cryptocurrencies showing no signs of being a flash in the pan, the mantra “evolve or die” seems to be the order of the day. Digital currencies are getting dangerously close to mainstream adoption, so it would seem that Facebook and the other entities backing this project are making a calculated attempt at getting ahead of the curve.
Facebook alone boasts in excess of $2.3 billion active monthly users, so not only could Libra instantly become the most widely used digital currency on the planet when it launches, it’s being speculated that it could also quickly dwarf bitcoin’s market cap. Former PayPal executive, David Marcus, who has been tasked with leading the project, has been focusing on the billions of people in the developing world without access to basic financial services.
Project Libra aims to bring these unbanked into the financial system though the very apps that so many of them are already familiar with and regularly using. This isn’t Facebook’s first rodeo when it comes to the payments space. Back in 2015 it launched the ill-fated Messenger Payments service, allowing users to send and receive money à la WeChat, however the service never really caught on.
Of course, beyond banking the unbanked, the possibilities are endless as far as advertising and e-commerce are concerned. The company will now be able to present its users with ads as well as giving them the facility to complete the entire purchasing process right from within the app. Not to mention the fact that it will also be amassing tons of precious data in the process that could then be used to target customers much more effectively.
You can think of it as the quickest, slipperiest, most efficient funnel in history from which there is almost no escape. This, naturally, has many concerned that Libra has the potential to degenerate into a dystopian nightmare and to this end, detractors have already dubbed the project “Panopticoin”.
Will it be decentralized?
The short answer is no. Libra’s blockchain, much like bitcoin or any other cryptocurrency’s, will provide a global public ledger of transactions, however only the foundation’s members will be authorized to run nodes and participate in the running of the network.
So, while Facebook and its partners will be building atop the new Libra blockchain, it will be permissioned, meaning that third party developers will have to receive permission from the conglomerate of companies that have each paid at least $10 million in order to become members of the Libra Association and run their own nodes. The foundation currently comprises 27 partners, which include names such as: Visa, Mastercard, PayPal, Ebay, Vodafone, Spotify, Coinbase and venture capitalists including Union Square Ventures and Andreesen Horowitz.
Facebook has had its name dragged through the dirt in recent years. What with the scandal surrounding the last US presidential election, privacy concerns and calls for its social media arm to be split off from its advertising business.
The company has been very careful to frame the project as being a federation of many companies, all working together under the aegis of a Swiss foundation. Calibra, the separate company founded to build and run the wallet service, will apparently not share user data with the company’s other apps such as Facebook and Instagram. Not unless users give it permission to do so by using Facebook’s find-a-friend feature (which for many is tantamount to saying that it will).
Could it Really be a Thing?
If one criticism were to be leveled at the cryptocurrency space above all others, it’s that it’s a dog eat dog world where everyone’s out for themselves. This kind of ruthless, no holds barred competition may well pay dividends when it comes to evolving the underlying tech, but it’s a no go when it comes to adoption.
What you end up with are siloed, mutually exclusive ecosystems, each with its own maddeningly steep learning curve. So, for all the lip service that gets paid to spreading the word and fighting the good fight, crypto is still notoriously difficult for the uninitiated to even comprehend, let alone use.
You see, the holy grail of this technology has always been getting your grandma to use it without even realizing that she’s doing so. And while since 2008, crypto geeks from Zug to Zanzibar have been frantically working away at decentralizing all the things, it would seem that one of the biggest, most centralized entities in living memory, is just months away from bootstrapping everything that looks, smells and tastes like crypto to its own leviathan advertising engine.
And you know the saddest part? Just like most Facebook users don’t really understand enough to give a damn about their privacy, even in the face of flagrant abuses, neither will your granny care whether its decentralized and permission-less or not, so long as it works, which it probably will.
Watch this space.