Photo Credit: flickr
As a tech giant continually in search of new revenue streams and new product offerings, Facebook really is a top innovator. Regardless of what you think about Facebook or about CEO Mark Zuckerberg, you have to admit that Facebook has been ahead of the curve on the introduction of just about every new technology platform, from mobile video to virtual reality. And that’s what makes Facebook’s latest mad genius idea – a global cryptocurrency called Libra – so puzzling. Of all of Facebook’s new product ideas, this is the one that has generated the most controversy and the most regulatory heat.
The controversy surrounding Libra
In fact, the controversy has become so great that many of Libra’s original backers are starting to distance themselves from the project. At a time when central bankers are warning that the Libra cryptocurrency could be the end of monetary sovereignty, and government regulators are warning that the Libra cryptocurrency could be the new safe haven for terrorists and narcotics traffickers, it’s easy to see why all of the top financial backers of Libra – including Visa, Mastercard and PayPal – have now dropped out of the project. And even some of the big tech backers of the cryptocurrency – such as eBay – are now gone. In short, the original coalition of 28 backers is dwindling, mostly because these companies don’t want to get mixed up in a giant regulatory battle on a global basis.
The case for Libra
As might be imagined, Facebook is trying to put its own spin on what’s happening right now. “We must be onto something if everyone’s against us,” is one explanation that Facebook executives have voiced on social media. Facebook is now trying to calm everyone down, telling them that they have no intention of becoming a new type of central bank or monetary authority outside of the purview of government regulators – they’re just trying to bring secure digital payments to the entire world. (Cue the video here of the underprivileged villagers in some forsaken land, suddenly saved by the ability to buy things with Facebook crypto.) Facebook says the whole idea behind Libra is to “break down financial barriers” and help out the world’s unbanked.
At some level, of course, the Libra crypto idea is so crazy and so out there that it actually makes a lot of sense. More people in the world have Facebook accounts than have bank accounts, right? At a time when Facebook is looking for a way to unite all of its various platforms and cash in on mobile commerce and other forms of digital payments, having a Facebook-branded currency makes sense. Imagine paying for your next Uber ride with Libra instead of a credit card.
Facebook vs. the establishment elite
Perhaps that’s why “the establishment” feels so threatened by Libra. It would literally change everything. It would change how we bank (we wouldn’t need them!), how we shop (everything priced in Libra, not dollars!), and how we move money around (no transaction fees!). It will be interesting to see how Facebook CEO Mark Zuckerberg tries to spin things when he testifies in front of congressional leaders in Washington, D.C. this month and into the future. Will he back away from Libra or not?