Written by Emma Lawton • Published 20th June 2019 • 2 minute read
Facebook’s news that it will be launching it’s own cryptocurrency, Libra, has made quite a lot of waves; but not necessarily for good reasons. While an interesting move for the social media behemoth, Libra represents a dangerous premise. And it’s not guaranteed to succeed or be the saviour of the fledgling cryptocurrency market.
Undoubtedly, the technology and adoption rates behind Libra are frankly astounding. Libra’s governance is made up of the biggest players in payment technology – Spotify, PayPal and Mastercard are all involved – which means that it is almost a given that Libra will be the most valuable cryptocurrency in the years to come. Being backed by tangible assets also means it has value that hasn’t been created out of thin air.
But Facebook’s main play here is to the billions of unbanked people in the developing world. Given their entire strategy at the moment seems to hinge around the developing world – they’ve made some serious ground with bringing mobile technology into developing nations in recent years and Facebook is almost synonymous with the internet now – this move with Libra is understandable. If Facebook effectively controls the internet in developing countries, as well as the monetary source, then they’ll be the most powerful company in the up and coming world. One which is catching up with first world counties at a much quicker rate than the first world is able to innovate itself.
Yet Facebook doesn’t exactly have a good record on data privacy, *cough* Cambridge Analytic *cough*, and yet this move would grant them a huge amount of power over intrinsically sensitive data. While it’s unlikely that the central banks will just let go of the power of money, Facebook will still now need to worry about much more than who has access to images or user profile details; think money laundering, KYC protocols across multiple jurisdictions, the safety of blockchain to name a few.
Another factor to consider is that Facebook itself is only a single member, with a single vote share of the entire organisation – which is non-for-profit. While this could be used in their defence that they won’t try to control the system, why would they do this unless they had some sort of ulterior motive? They’re not exactly altruistic.
Add to this the fact they’re launching their own wallet, which is set to be built from the ground up to support transactions with Libra across Instagram and Facebook. This will ultimately create an ecosystem where you can buy an influencer’s clothing line directly from Instagram using Libra.
Sounds great right? No – therein lies the catch.
The move to launch Libra is fundamentally a business-motivated decision. It’s not about advancing blockchain technology or showing the value of cryptocurrency. The fact Facebook only represents one vote out of 27 matters very little when they control the vast majority of popular tech in today’s society.