The Pivotal Libra Project Means Facebook Could Disrupt Crypto
Facebook’s global coin called Libra will have a lot of positive aspects that traditional cryptocurrencies and blockchain startups cannot compete with.
This means in the advent of the token economy, Libra might be the most important product of the 2020s, launching likely in early 2020 with a whitepaper due on June 18th, 2019.
Facebook has a blockchain division that has been working hard on this and it could elevate Facebook’s payments, centralized chat and E-commerce plays .
According to a Reuters report, Facebook registered a new company, Libra Networks, in Geneva on May 2. It’s very easy for me to speculate on what this could become.
Facebook’s stablecoin will also help bank people who don’t have access to banks and so forth in developing countries.
Facebook Wants to Clone WeChat
Remember, Facebook’s suite of chat apps such as WhatsApp, Facebook Messenger and even Instagram DMs are going to become centralized, so a stablecoin peer-to-peer payment system tethered to fiat currencies will make for easy transfers and cross-border payments to friends and family.
Centralized Stablecoins Could Disrupt Cryptocurrencies
While Libra’s success could increase demand for Bitcoin, it could make other projects like Ripple, Litecoin and others less of a thing. That’s really the disruption that’s likely as stablecoins will get easier regulation in the actual banking and financial system. This is because a stablecoin is always tethered to a fiat baseline.
BigTech and big banking want to own the future of being convenient and like banks. Harvesting some crypto hype in the guise of blockchain is to elevate their walled gardens and increase merchant adoption. Facebook, Apple and Amazon will all try to become like banks in the not so distant future.
Stablecoins could be very useful in the event of hyper-inflation scenarios. The best example recent example for many is Venezuela, which is experiencing hyperinflation worse than that of Germany after World War I. Places like Italy or Iran might one day need help. Facebook could swoop in for the rescue with a product like Libra.
Imagine a world where Libra is the central global currency, and not the American $. You never know what might happen with blockchain.
According to a Forbes analyst, Facebook could even pay interest to holders of its cryptocurrency, and this will eventually lead to populist calls to repeal corporate subsidies to banks at the heart of the U.S. banking system. I find that an intriguing prospect, however unlikely.
I think the main value of Libra will be the B2B play. I see businesses buying into the hype and paying Facebook a lot of money to get integrated as a hub. Even if Libra isn’t a huge success, it’s yet another blockchain product that augments payments for consumers, businesses, SMBs and proof-of-concept for stablecoins as digital currencies.
Facebook plans to cede governance control of its project to an independent foundation, which it recently formed in Switzerland. This is really how you clone crypto by seeming fair and unbiased. Though of course Libra won’t have any real features of decentralization, that’s how exiting firms and banks can disrupt crypto. They can pretend they are like them with blockchain tech, without the decentralization and value system that young people actually like.
Libra might also face regulatory uncertainty — which will shed light on many outdated financial regulations in the process. Facebook’s blockchain product in payments could be a first mover in a way that makes Ripple and Litecoin look small and PayPal and Square look traditional.
Libra could be something that both disrupts crypto and transforms the future of payments and also ushers in a stablecoin renaissance.