Libra, Facebook’s yet-to-be launched cryptocurrency, is still receiving a lot of reviews for and against its favor, with many in the industry split over its operations and utility. Meltem Demirors was one of them, and she has a very different take on why Facebook launched a cryptocurrency now, when the industry is already a decade old.
With the announcement of Facebook’s Libra, its governing company, Calibra, has created great hype in the crypto-ecosystem. Many big-wigs in the industry put out their views on the table, which to an extent has resulted in a lot of confusion among the lesser known public.
Facebook has over 2.5 billion users worldwide, making it the largest social media platform in the world. With the GlobalCoin in place, users of the platform will experience something new which is using “wallets”.
With the launch of Libra, Facebook is likely going to become a payment space, without actually becoming a bank.
In the past, Facebook has seen many high profile exits, hampering the popularity/status of Facebook. The social media giant has also still not completely recovered from the Cambridge Analytica debacle when they it was charged with leaking user data to create fake profiles “and deliver pro-Trump material.”
It is important for the social media giant to understand that macro market also plays an important role for them. For example,
Europe – Many countries in the continent have recently started collecting fines under General Data Protection Regulations imposed by the European Union. Along with Apple and Google, Facebook too has to pay heed to it.
US – Policymakers in office have chalked out new privacy regulations, which could go into effect by the year-end.
Asia – Facebook’s largest user segment is in India, where the market opportunity is very large given the lack of clear competitors. However, as recent reports have suggested, the future of Libra in countries such as India remains bleak.
Facebook believes that by venturing into the blockchain space, it is likely to disrupt financial services. Though Facebook has the largest user base in the world, in the past there have been many other tech companies that have put forward their interest in blockchain and native tokens.
The new cryptocurrency is said to compete with central banks and stablecoins, and not Bitcoin. However, many are in agreement that Facebook’s entry is a positive sign for the crypto-industry as a whole.
This is ‘why’ behind Facebook’s belated entry into the cryptospace. Whether Facebook finally overcomes regulatory challenged and takes the leap when Libra launches, and whether the crypto will be successful or not however, is still up for debate. Only time will tell.