Facebook Unveils Global Cryptocurrency, Eliciting Hope and Sparking Criticism

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Facebook Unveils Global Cryptocurrency, Eliciting Hope and Sparking Criticism
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Facebook Introduces Its New Digital Currency

It was only a matter of time until the world’s largest social network jumped into the blockchain technology and cryptocurrency revolution. Just as in the past Facebook acquired messaging and social networking services Whatsapp and Intagram to stay ahead of the curve, this week it announced its ambitious plans to launch a new cryptocurrency in 2020. Facebook’s digital coin Libra and digital wallet Calibra are to make payments as easy as sending a text message to a friend. Exchanges will be executed through a simple app integrated in Facebook mobile products, such as Whatsapp and Messenger.

What Does This Mean for the World?

Facebook HQ

The new digital coin is lauded for its potential to level the playing field among global users. This could be a key development for financial inclusion – an important driver of economic development. Libra will be able to provide a service for the world’s unbanked population. More than a billion people around the world who do not have the means or access to financial services, including people in developing countries and women, will be able to use the new digital currency, according to Facebook, which says it will keep Libra’s fees very low.

Good News

Facebook’s newest venture can be seen as a boost to the whole cryptocurrency ecosystem. Finally, a major multinational company is establishing a means of exchange for both industrialized states and emerging markets. The development is expected to help other well-known cryptocurrencies, such as Bitcoin, gain trust and momentum. Libra has the potential to introduce billions of people around the world to cryptocurrency, dramatically growing the number of users and taking the new technology mainstream. To help build trust in the project, Libra is already backed by hard assets and supported by well-established partners from Paypal, Visa, and Mastercard, to Uber and Spotify. Facebook has also hinted that this project will have a different business model and structure, distancing itself from Libra via an Association where the social media giant only holds 1% of the board.

Challenges Ahead

CEO Mark Zuckerberg at F8 2019. Image courtesy of fb.com.

There is plenty of campaigning, work, and hurdles ahead. Experts worry about transparency of the Libra Reserve and its Association. Facebook will have to confront public concerns about the company having too much power and not doing enough to protect its users’ privacy. After all, Facebook has been increasingly scrutinized for handling private information, and has been investigated for data misuse in 2018. Skeptics also question whether Libra can reshape the world’s financial system, creating challenges for governments, the IMF, the World Bank, and the dollar. They also wonder if it may have put an end to a variety of other fledgling cryptocurrency projects, by creating unbeatable competition.

Facebook’s announcement and new effort comes as no surprise, and absolutely makes sense. After all, Facebook and social media have become an important part of our lives, but so have transactions. One thing is for sure: with Facebook’s support, cryptocurrency can become a household word around the globe.   

Text by Maria Birger and Contributor @lordcatoshi