For those who have followed the story of Bitcoin over the last decade, it should come as no surprise that leading companies such as Facebook are beginning to try their hand at the crypto-currency game.
Famed for jumping from $10 to over $16,000 per coin or “share” in only a short period of time within the last ten years, Bitcoin created a wave newly-minted billionaires when its price first skyrocketed several years ago. The gamble on a then-unknown and untested currency paid off for investors, and to those interested in the financial potential of decentralized crypto-currencies, it was only a matter of time before mainstream companies attempted to replicate Bitcoin’s success.
A New Crypto-Currency and a New Era at Facebook
With its announcement of its new crypto-currency Libra, Facebook is already making headlines around the globe. Simultaneously announcing a subsidiary company called Calibra that will act as a digital “wallet” for its new digital coinage, Facebook appears to be going all-in on its massive crypto-currency push, and many analysts are already noting the similarities between Calibra and immensely profitable Bitcoin exchanges such as Coinbase.
Tweaking the Bitcoin Formula
But Libra isn’t exactly like Bitcoin in all respects. Facebook’s game plan for Libra appears humanistic rather than speculative in its goals, for example, with the company stating that much of Libra’s business will come via money transfers in developing nations; places, where stable currencies or banking centers are not currently available, appear to be the focal point of Libra’s marketing plan, and Facebook’s massive influence in foreign nations will likely make its global currency aspirations a reality.
Indeed, already partnering with companies such as Uber, eBay, Visa, and Mastercard, and touting Facebook’s reach to billions of users, the currency could have an impact easily rivaling that of Bitcoin, even if investors won’t be using the currency for risky trading in the way that Bitcoin supporters have done for years. For fans of Blockchain technology, however, the signs are clear that stable and decentralized currencies are the way of the future; Libra maybe society’s first major step away from traditional notions of cash exchange.
The Green Difference
As a crypto-currency, Libra could also make headlines for its environmentally sound production. Perhaps the biggest criticism of Bitcoin trading in recent years has come due to the currency’s environmental impact; a process by which Bitcoin is created and disseminated, crypto-currency “mining” currently requires truly enormous outlays on electricity, leading some critics to speculate that the rise of Bitcoin could be an environmental time-bomb, particularly as more and more Bitcoin miners increase their profit margin by consuming greater amounts of power. According to Facebook, Libra will take a more green approach to crypto-currency trading by allowing the company itself to handle distribution of its coins; users won’t be burdened with “creating” the currency independently, in other words.
Balancing Privacy in the Age of Ad Revenue
For its early supporters, Libra certainly ticks the right boxes on environmental concerns, but how does it fare with critics who already question the seemingly Orwellian ubiquity and power of Facebook over the lives of its users? Would a Facebook-backed currency simply consolidate the power that Facebook already has over the lives of its account holders?
If critics of Facebook’s privacy policies are worried that the company will hold an iron grip on its new coinage, they probably shouldn’t be: Facebook has already partnered with over 20 companies to manage the currency via a nonprofit group it calls the Libra Association, and because the organization aims to help aid the development of Libra and manage its growth, there is little chance that Facebook will be running the show completely on its own. In fact, part of the business plan for Libra involves making the currency an independent business once it is up and running; true to the freewheeling ethos of decentralized crypto-currencies in general, Libra could be fully independent within a few years.
While it remains to be seen how Blockchain-based currencies will compete against the dollar in an economy that still relies on traditional banking and conventional cash exchanges, it appears that Facebook has developed a winning formula for integrating the technology of Bitcoin into its business model. The new initiative may have its critics, it is true, but for fans of technological innovation, Libra could be the way of the future in the financial world. If Bitcoin’s success is any indication, Libra may also prove to be one of Facebook’s biggest and boldest initiatives in recent memory.