Facebook is looking at launching their own digital currency next year. Something they have called project Libra, or Global Coin.
We’ll know more about it this week.
According to reports on the news, there are several global companies backing the project, like Uber, Paypal and Visa.
The idea is that it will allow users on Facebook, Messenger, Instagram and Whatsapp to send each other money, but also to buy things in shops, online, you name it. All without needing to have a bank account.
Facebook would lure people into their digital currency by making it easy to send money. No bank accounts, no digital wallets, no need to understand cryptos or security…
But while Facebook is tooting it as a digital currency, the truth is that it is quite different from cryptos like bitcoin.
For one, it will be pegged to a basket of government issued currencies to make it more stable.
For another, it is likely to be centralised.
You see, the thing that makes bitcoin different is that it is a decentralised system. That is, there is no centralised authority controlling the currency or the network.
Facebook’s project is sure to have a lot of reach. Facebook has now over 2.3 billion monthly active users.
And it comes at the same time that Facebook is launching Study, a program where Facebook will pay users in exchange for allowing them to track their app usage or looking at ads. It could be an easy way to incite people to use the new coin…or by requiring companies to buy it in order to advertise in the network.
Truth is Facebook is a digital advertising giant.
Their model is simple: give you a free service so that they can collect your data and then use it to advertise it.
Global tech giants dominate the market
And as you can see below, global tech giants have already taken a big chunk of the advertising market. In the case of Facebook, they take have a whopping 83.3% of social ad spending and close to a third of mobile ad spending.
Meanwhile, there is antitrust talk in Washington.
You see, big tech has been flying under the radar because they offer a free service. But that could all be changing.
Washington is starting to look at breaking up these companies.
The risk with using Facebook’s coin
The danger here is that big tech makes up a large part of the market, and we could see their share prices collapse, taking down a part of your portfolio with it.
But Facebook could also run into trouble as many aren’t willing to work with Facebook. Remember, it wasn’t that long ago that Facebook banned crypto advertising on their network.
‘Facebook’s GlobalCoin project, also known as Project Libra, may face significant hurdles as the social media giant works toward a prospective launch.
‘Despite reports that Facebook is gearing up to reveal its new cryptocurrency as early as next week, a source with knowledge of Facebook’s operations said the project’s software has a long way to go until it can be used. Sources attribute the delay to blockchain industry incumbents being reluctant to work on a project that doesn’t appear to have the hallmarks of a true cryptocurrency.
‘One source estimated that early 2020 would be a more realistic timeframe for testing, so any imminent announcements would merely be forward-looking plans.’
Facebook is looking at integrating into more areas of your life.
Integrating different aspects is something we have seen in apps like Tencent’s Weixin, or WeChat as we know it in the western world.
WeChat is kind of a super app. It has become one of the most powerful ecosystems in China and what every app strives to be: everything for everyone.
The ‘super app’ allows you to do almost everything: from social networking to booking a doctor´s appointment to making payments.
The problem is, there are concerns with privacy too. We are looking at China moving towards a social credit system, one where every part of a person’s life is integrated and then gives them a social score.
By using Facebook’s coin, you are not only trusting Facebook with your digital persona, but you are giving them a chance to connect it with your finances. And remember, Facebook doesn’t have the best track record when it comes to privacy…
We are moving towards a more centralized system, a more monitored internet. A society not completely dissimilar from George Orwell’s 1984 dystopia.
Meanwhile, bitcoin is rising…