Will Facebook’s Libra replace banks?
Facebook is working on a new cryptocurrency called “Libra” which will be launched next year.
A new blockchain will be implemented for this new currency, and there will be no ‘mining’ to get it but you’ll have to buy it. So it will be different from the Bitcoin because Libra’s blockchain won’t be decentralized, or rather not at the moment.
The value of Libra will be guaranteed by a reserve of real assets, initially provided by partners that buy into Facebook’s Libra Association, such as Mastercard, Visa, Paypal, eBay, etc…
Facebook will be a new global currency standard, like the US Dollar but more stable to exchange.
To manage Libra, Facebook will have its subsidiary called Calibra which will create digital wallets, plugins, and apps for this new currency.
Facebook says that the main reason for making Libra is to include people who have difficulty to access to a bank. People with less money pay a lot for financial services because most of their income is eroded by fees. So the goal of Libra is ‘financial inclusion’.
Moreover, Facebook wants Libra to be a payment for both online and offline purchases, as well as for sending money among family members and friends in every country of the world with low conversion and transaction fees.
Calibra will start off in Messenger and WhatsApp then into standalone apps.
Through Calibra, Libra will be used to perform most of the functions of financial institutions: bank accounts, loans, connecting to ATMs. So Libra could offer a real alternative to the existing banking system. But why to trust Facebook more than a bank? Calibra website says that account information and financial data will not be used to improve ad targeting. Anyway, doubts remain. Will this be a good thing in the long-term? Not everybody loves banks, so it could be positive if a new concept of bank will be realized. But will it be safer than a bank? Or will our personal and financial data be used for something worse in the future, regardless of what they claimed? Or maybe will this new world of cryptocurrency just contrast the hegemony of banks?
As usual, we’ll see.