Introducing Libra: Facebook’s New Cryptocurrency Product to Rival Bitcoin

Earlier this week, Facebook announced its plan to launch Libra, a new blockchain payment system that could significantly reshape e-commerce and fin-tech landscapes. Libra is a digital coin that Facebook users can send to each other and use to make purchases on the platform and across the internet. The company likens the product to Apple’s development of iOS, claiming Libra matches the operating system in terms of importance and scale. The digital payment service will be available in 2020 on Facebook’s Messenger and WhatsApp services as well as a stand-alone app.

Facebook is following the footsteps of major competitors Amazon and Apple, who’ve made forays into the financial lives of their users earlier this year. Like Apple and Amazon, Facebook is partnering with traditional financial firms– including MasterCard and PayPal–to manage financial logistics and regulations. Also backing the project are tech giants Uber and Spotify, which will help Libra maintain security, reliability, and scalability.

Stock prices of bitcoin surge in June 2019. (source: CNN)

Libra poses a considerable threat to traditional e-commerce, as it may become the most accessible and popular form of cryptocurrency on the market. While bitcoin and blockchain technologies aren’t popular payment methods right now, Facebook predicts that its network of 2.38 Billion users can– and will–change that. Despite the company’s muddied track record, its size will undoubtedly help broaden the appeal of the cryptocurrency industry– a fact that investors like MasterCard are well aware of. Supporting this impressive claim is the surge of bitcoin prices, which recently rose above $9,000. The rise in stocks signifies a market-shift that favors cryptocurrencies over traditional asset classes.

Facebook is brainstorming ways to differentiate Libra from similar products on the market. One idea in development involves reimbursing users with coins when they view ads, interact with content, or shop on the platform. The idea, which is modeled after rewards-systems at traditional retail stores, has the potential to drastically change the future of digital marketing and advertising. Developers at Facebook are making the program as accessible as possible, with the hope that it can be used to make everyday financial transactions like paying bills, making purchases, and paying for public transport.

In order to meet its high expectations, the project must overcome a variety of obstacles. Facebook’s announcement finds itself in a cloud of controversy, as pressure to address data-privacy concerns continue to intensify. To ease user and shareholder anxiety, the company created Calibra, a regulated subsidiary to Libra that will maintain a sort of “checks and balances” between social and financial data. Calibra will be managed and operated exclusively by The Libra Association, an external non-profit organization in Geneva.

Aside from data-privacy concerns, logistical issues dampen the project’s otherwise bright forecast. Cryptocurrencies have yet to catch on in payments, and the existing system is bogged-down by interests and technological glitches. This puts Facebook in a sticky situation, as its tense relationship with users and regulators make it an inopportune time to delve into new territory.

Due to market and sentiment volatility, It’s difficult to tell whether Libra will succeed or flop. Libra’s future seems even more unpredictable considering the heavy criticism Facebook has fallen under over the past year-and-a-half. However, with such strong assets and corporate partnerships supporting the project, the odds are certainly in its favor.

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