Facebook money? We are all familiar with Bitcoin, a digital currency that has been making headlines since 2009. Now Facebook and a couple of other large companies want to launch their own version of Bitcoin. They claim it will be safe, reliable and more stable than available cryptocurrencies. Let’s get to understand this new digital money that will probably be used by Facebook’s 2.4 billion users, yourself included.
What is Libra?
Libra is a digital currency like bitcoin that will launch in 2020. You will be able to use Libra to shop online, send money to friends and family and pay for business ads on Facebook. Libra will be run as a separate organisation from Facebook, where close to 100 of the largest organisations in the world will be members and each gets a vote. So far the members on board are Visa, Uber, Andreessen Horowitz, Vodaphone and Paypal.
How does it work?
Once it is launched you will need to get a digital wallet on your phone or computer to keep your money. Libra will also be integrated into Whatsapp and Messenger so that you can send money the same way you send messages. All of this will be protected by encryption so that you can keep your identity safe to avoid being tracked online. You will be able to exchange your pulas, rands and euros for libra through online wallets, local merchants and by getting it from other libra users.
Can I trust Facebook with my money?
Over the last 5 years, alone Facebook has had massive issues with privacy invasions and leaks on its platform. The Cambridge Analytica breach which saw 84 million users information harvested and misused for political gain. More recently leaked emails have shown that Mark Zuckerberg may have been aware of some of these leaks earlier than he admitted publicly. What is different about the Libra Association is that Facebook will be 1/100 voters on the way Libra is run. They have ensured that the Libra network will have fail-safes such as backing the libra currency with real investment assets. Libra also promises to refund any lost digital coins in case your phone dies or gets stolen.
What does this mean for the future?
I have followed the crypto world since 2013, and I have come to learn that the biggest issue that cryptocurrencies try to fix is too much government involvement in our money systems across the world. This means it will be a lot harder for governments to make decisions that affect your money like we have seen situations of hyperinflation in Zimbabwe and more recently Venezuela.
Libra also aims to make it easier to send money across the world without exchange fees and bank charges. This will definitely help reduce the 7% cost of moving money across the world. Especially for the millions of Africans sending over $54 billion back to the continent every year. Companies like western union, money gram and many other remittances business will definitely be affected.
Mobile money operators like My Zaka, Orange money and Poso Money will definitely be affected by this move. They were at the forefront of the mobile money revolution in Botswana. After the launch of Libra who would want to use their expensive offerings. The introduction of Libra will also lead to a stifled innovation market which the African continent as a whole is still struggling to take part in.
In the longer term, we might see an emergence of global power structures that almost supersede existing governments. This will create a huge power shift given that most of the technology companies taking part in such initiatives are mostly against taxes and control from governments.
It remains to be seen what the world will look like if ever corporate currencies like Libra become ubiquitous. Imagine the Botswana Pula completely surpassed by these new age currencies.
Leave your comments and questions so we can discuss the new Facebook currency, Libra.