A Libra-Powered Travel Industry
Libra’s path to mainstream adoption starts with international travel
As the United States legislature battles Facebook in what’s poised to be an epic showdown, governments around the world struggle to determine how to respond to the social media giant’s proposed currency. However, while lawmakers debate data privacy concerns and threats to established currencies, it’s important to consider where the currency is going and what path it might take to get there.
How Is It Different From Bitcoin?
I discussed this in greater depth in an earlier post, but I’ll touch on it briefly here:
- Bitcoin and Libra are both cryptocurrencies, so transactions are recorded on a distributed ledger.
- Because Libra will be backed by a variety of fiat currencies, its value will be more stable than Bitcoin’s. However, it will still fluctuate in relation to any one fiat currency, as fiat-to-fiat exchange rates change.
- Rather than allow the general public to validate transactions, Libra transactions will be verified by an exclusive group of one hundred Libra Association members. This will increase the speed and scale of the system, but it is inherently more centralized than Bitcoin and users will be required to trust these organizations.
The Early Players
So far, a group of 28 companies and organizations have signed on to become founding members of the fledgling Libra Association. Among them are high-profile corporations like Visa, MasterCard, PayPal, Booking Holdings (the company responsible for booking.com), eBay, Lyft, Uber and Spotify. Also of note are venture capitalists Andreessen Horowitz, which has more than 700 investments, and Union Square Ventures with around 270 investments.
It’s no surprise that a large number of these early-backers provide services related to the travel industry. With the high fees and headaches associated with converting between fiat currencies, international travel may just be Libra’s ticket into mainstream adoption.
How It Might Work
Libra’s path to mainstream adoption will be through the international travel industry. Businesses associated with tourists, whether they be hotels, taxi services, or dining establishments, will be the first to accept the tokens. More tourist locations will adopt it once they see the added convenience that it brings to themselves and their customers. As more stores jump on the bandwagon, locals in tourist towns will also see the convenience digital currencies can bring and will begin using Libra as well. Adoption will spread into less and less touristy areas until it is accepted in thousands of areas around the globe.
The Disclaimers
Of course, this is all dependent on Libra getting the green light from governments and regulators around the world, a daunting prospect given this week’s hearing with US lawmakers. The most common concerns expressed by lawmakers were regarding Facebook’s shaky record with data privacy and the stability of the global financial system under Libra.
It is to be expected that the currency will be banned in a handful of countries— mostly those that have banned all cryptocurrencies, some that feel especially threatened by the role of Facebook and other corporations. For the latter group, new innovations like the lightning swap, which allows users to pay using one currency and the recipient to accept payment in a different currency, will create a more unified financial system, even if Libra is not universally accepted.
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