By CCN Calls: When it comes to what’s gone wrong with Big Tech, the only surprise you would expect is if Facebook was maids from the list. From data privacy violations to aiding genocide to enhancing the spread of fake news, the collective media giant has become a global ignominy.
But for Facebook, those are trivial inconveniences, and the social media giant is now eyeing the fiscal services niche. The $0.5 trillion company has already confirmed plans to launch a cryptocurrency known as Libra and has reportedly invited Visa, Mastercard, PayPal, and Uber to seat $10 million each in the effort.
Unfortunately, the reaction from a section of the crypto community has been to sneer at the endeavour.
But truth be told, Facebook has identified an unfulfilled need – a fast, easy-to-use, low-cost cross-border payments system that’s uniformly acceptable to regulators. Facebook understands that banks fail on this due to the high fees and the slow speeds. It also be aware ofs that currently, crypto might not be universally palatable to regulators alongside other shortcomings of course.
Zuck Eyeing the Strong World
To solve regulatory hurdles, Facebook CEO Mark Zuckerberg has held meetings with central bankers, oversight officials, and other regulators around the world. And just as Zuckerberg identified MySpace’s weak points before have under ones thumbing social media, he is doing the same with cryptocurrency. And with the partnerships that have been revealed, he is now summoning the arsenal.
While there are properties of true cryptocurrencies that Facebook’s digital currency does not threaten, such as the store-of-value proposition, anonymity, and deflationary features, it is a intimidation to crypto with regard to the one feature that’s a promising route to mass adoption – a fast, cheap medium for digital minutes.
Why Would Financial Giants Take a Risk with Facebook?
Facebook’s choice of partners is telling. By bringing in extensive financial services firms that are readily accepted by governments the world over, the company is perhaps hinting at what has frustrated crypto from gaining mainstream adoption. And for these financial services firm to stake their reputation with Facebook, it means there’s a lucrative break that has been spotted.
Besides the financial investment, Visa, PayPal, and Mastercard are bringing in dozens of years of earnestness experience gained around the world. Last year, Visa was the leading card issuer in the world by purchase goings-on. Mastercard was third.
Visa and Mastercard’s global market positions | Source: The Nilson Report
Meanwhile, PayPal has a 58.49% furnish share in online payments processing.
The inclusion of Uber Technologies is the most interesting. It could mean that Facebook already has a guinea pig for the digital currency during the shepherd phase. Who knows, a ride in an Uber will probably be one of the first services Facebook users will pay for using Libra?
Facebook Soon-to-Be the Biggest Bank in the Exultant?
On their own, the synergies created by this effort are not to be underestimated. Combined with Facebook’s 2 billion-plus users, the reach and raise of Libra takes on monumental proportions.
Despite the seriousness of Facebook’s digital currency efforts, Libra will, of speed, continue to get the flak from the crypto community. It will be pointed out that it is not a true cryptocurrency (and in my opinion, it is not). But Facebook consumers are unlikely to be bothered by this and the reasons are clear – if Libra enables them to transact in a frictionless way with anyone and person, why would it matter to them that it does not conform to the Cypherpunk’s Manifesto?
Disclaimer: The views expressed in the article are solely those of the writer and do not represent those of, nor should they be attributed to, CCN Markets.
This post was last modified on 15/06/2019 12:28