Most of us, unless you’ve been living under a rock, have heard of Bitcoin and perhaps even some of the cryptocurrency’s rivals, which include Ethereum, Ripple, Dash and Litecoin. They purport to make our lives easier because they can be easily exchanged and there’s no regulatory body dictating how much of it can be bartered.
But there’s a lot of skepticism around these currencies because of the mystery that surrounds them. When it comes to Bitcoin, for instance, there’s the question of its origin. Who created it? To this day we still don’t know if it has been created by a person or group of people using the name Satoshi Nakamoto. What’s their motive? Does he/she/they have good intentions or is there something sinister at play here?
Sinister intentions or not, what we do know is that cryptocurrencies are becoming mainstream. According to research conducted by the University of Cambridge there were around 2.9 to 5.8 million unique users using a cryptocurrency wallet in 2017 – with most of them using Bitcoin.
But now there is a challenger in the form of Facebook’s Libra. According to the New York Times’ coverage of the announcement Libra is a cryptocurrency that can be sent instantly and ‘with almost no fees anywhere in the world’.
Facebook has done a lot of homework and garnered the support of a consortium of 27 backers including Spotify, Ebay, PayPal, Visa, Mastercard, Stipe, Ribbit Capital, Coinbase Uber and Xapo to name but a few.
It’s set to become available to the public in 2020. However, this isn’t set in stone as there could be some setbacks to the launch.
There are also privacy concerns. If Facebook gets its way with worldwide cryptocurrency domination, there is a worry that it will give the social media player far too much power.
The benefits include people gaining easy access to the cryptocurrency and being able to change the virtual currency between Facebook accounts. It will provide even more freedom to the millions of ‘unbanked’ who would gain access to the currency through their smart phones.
But at what cost? It will give Facebook access to our spending habits. They’ll get to know us on an even more intimate level than they do already and will be provided with insight into whether we prefer to shop at Marks & Spencer or Tesco or if we regularly bail out uncle Bob living in Canada because of his gambling addiction.
Is this not too much power for a firm that not so long ago was found to be giving Cambridge Analytica access to personal data of millions of Facebook user’s profiles without their express consent for political advertising purposes? Perhaps it is, but there’s no denying that this technology could change some lives for the better.
So, what are the differences between the Libra and other cryptocurrencies? Well, not much really. The difference is that the Libra will be backed by hard currencies, such as the euro or US dollar, and of course the only other subtle difference will be that it can be exchanged on the Facebook platform itself. There’s also no laborious mining involved, and the cryptocurrency can be held in a bank account instead of a cloud for safekeeping.
If Facebook get it right, it could very well prove a game changer because if it’s able to convince its 2. 7 billion customers (using Facebook messenger and WhatsApp services) to transact with the currency it will outperform most of the biggest banks in terms of customers.
What’s more, these people will be able to transact with any person or company wherever they may be in the world. This could well and truly create a global currency and the easy flow of transactions that many of us have till this point only been dreaming of.