Facebook's Libra, The Huge New Global Currency - Will Replace Pound And US Dollar In Foreign Exchange Payments?
LIBRA UPDATE: Not a day after the official announcement on Facebook's shiny new Libra crytpocurrency, officials from the social media giant have been summoned to testify before a US Senate panel over the digital currency project.
David Marcus, who has headed Facebook's blockchain efforts is expected to give evidence before the US Senate Banking Committee on July 16th with data privacy considerations expected to be high on the agenda.
Facebook has faced significant backlash over recent months over mishandling of user data, not doing enough to prevent Russian interference in the US 2016 elections and for abetting in the breach of election campaign rules in the run up to the 2016 EU referendum.
Representative Maxine Waters of the House Financial Services Committee has also said she plans to request testimony from Facebook on the project and has asked the company to put a pin in the project while policymakers make their evaluation.
Facebook has as of yet not made an official response to the requests and as it stands Libra remains set to launch in H1 2020.
The crypto-sphere was a-buzz with activity on Tuesday following Facebook's announcement on their highly-anticipated entrance into the cryptocurrency market.
From the official Facebook announcement: "Today we’re sharing plans for Calibra, a newly formed Facebook subsidiary whose goal is to provide financial services that will let people access and participate in the Libra network. The first product Calibra will introduce is a digital wallet for Libra, a new global currency powered by blockchain technology. The wallet will be available in Messenger, WhatsApp and as a standalone app — and we expect to launch in 2020."
According to the article, Calibra aims to overcome barriers to basic financial services, opening up the world of saving, spending and sending money to anyone with a smartphone and internet access.
From the release: "Calibra will let you send Libra to essage and at low to no cost. And, in time, we hope to offer additional services for pealmost anyone with a smartphone, as easily and instantly as you might send a text mople and businesses, like paying bills with the push of a button, buying a cup of coffee with the scan of a code or riding your local public transit without needing to carry cash or a metro pass."
But what will the entrance of arguably the worlds most powerful private surveillance apparatus into a sector dominated by a push towards de-centralisation and anonymity mean?
According to the whitepaper accompanying the official announcement, Facebook doesn't see the cryptocurrency as an attempt to replace or compete with Bitcoin, rather its intended to extend basic financial services to under-served populations that currently lack access taken for granted in many first world countries.
Around the globe almost 2 billions adults "remain outside of the financial system with no access to a traditional bank, even though one billion have a mobile phone and nearly half a billion have internet access," according to the paper.
Furthermore, while Bitcoin has flourished over the last five years, growth has been largely organic. With Facebook arguably one of the worlds premier marketing platforms with over 2 billions users worldwide, we can expect no lack of Libra demand when it launches next year.
"Facebook has 2.4 billion users worldwide, apparently. If they all start using Facebook money – phew! The potential is phenomenal. Things like the pound and the US dollar will become a sideshow," wrote Dominic Frisby of MoneyWeek.
Nicholas Colas, co-founder of DataTrek Research wrote "For large chunks of the world, Libra will be about having a superior form of payment and wealth preservation."
How Will Libra Work?
The newly-formed cryptocurrency will be managed by a Swiss-based (Calibra), a subsidiary of Facebook with Facebook stressing that the Calibra system will not be used to share "account information or financial data". Given the flack Facebook has come under recently for possible intervention in political campaigns around the world, its unsurprising the social media giant is looking to put some distance between itself and the management of Libra.
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