The mission is simple: “To enable a simple global currency and financial infrastructure that empowers billions of people.”
Yes, that’s right. Billions of people. 2.38 billion people to be exact. That’s how many monthly active users Facebook claims use its social media platform. More interesting Facebook facts here.
But Facebook isn’t just in the business of providing an avenue for you to see, like, and comment on baby pictures of your cousin in Wisconsin, or your goofy uncle having a “hold my beer” moment and posting the video for all to see.
No. The mission statement above belongs to Facebook’s new Libra project. An initiative Facebook is leading to bring cryptocurrency usage to the masses. The project aims to create a digitized form of currency that can be used to purchase goods and/or send money to others directly, right on the Facebook platform and its affiliates. Think Whatsapp, Instagram, etc. As a user of any of these platforms you’ll be able to use your Libra wallet, called Calibra, to pay for pretty much anything. You can even send money directly to your friends and family. Venmo, watch out.
The Libra coin will be linked to a basket of real securities such as short-term government bonds of various stable countries and bank deposits of a wide variety of global currencies from different central banks. The problem Facebook is trying to solve is to remove much of the volatility in price that surrounds current cryptocurrency initiatives such as Bitcoin or Litecoin.
Facebook hopes by having the value of Libra linked to a basket of low-volatility assets, then it too will be a stable currency. This is important because none of us want to be that guy that bought the first thing ever using bitcoin. Nearly a decade ago, a developer bought two large pizzas using 10,000 bitcoins, or nearly $30 in value at the time. No big deal. However, valued at today’s price per bitcoin, those pizzas cost him a $100 million. Should’ve held on to those Bitcoins, buddy.
Facebook’s Libra project hasn’t been met with open arms, however. And why should it be? Firstly, Facebook is no fan of the public eye. It lost many people’s trust over how it stores and uses user’s account information. Remember the whole Cambridge Analytica scandal in 2017? Yea, we do too. According to surveys conducted by NBC News, trust in Facebook has fallen by 66% since that occurred. That isn’t surprising either considering how widespread the coverage was and how many people it affected.
Now we have this same distrustful organization competing to enter a cryptocurrency landscape that has been marred by negative headlines due its connections with fraud, illegal weapons and drugs, and many other dangerous and illicit buying and selling activities all under the secrecy and anonymity that blockchain technology provides.
This is one of the reasons why cryptocurrencies have had difficulty gaining mass adoption despite them being around for so long. The Bitcoin whitepaper was written over a decade ago in 2008, the same time the new iPhone was first unveiled. Look how far iPhone technology has come while Bitcoin hasn’t really seen the mass adoption it is expected to have considering the amount of headlines it receives. Sure the price of a bitcoin has skyrocketed in that time and speculators that initially bought into the idea are now driving Lamborghinis. But can I buy an iPhone with any of my Bitcoin at BestBuy?
Unfortunately not. And that sucks.
But I believe Facebook coming forward with this project is a good thing for Cryptocurrencies in general. Its forcing congress to finally confront this topic head on with real conversations.
Facebook has long sought to incorporate some type of digital payment system on its platform, but its initial idea of Facebook Credits never materialized. That’s when David Marcus, former President of Paypal and current Head of Facebook Messenger, came up with the idea that Facebook should enter the cryptocurrency market. Mark Zuckerburg CEO and Founder of Facebook instantly agreed hoping to keep his dream of a platform payment service alive. Learn more about how this project came to life here.
The result was staggering.
Not only did Facebook create its own cryptocurrency, but it created its own blockchain infrastructure and coding language called Move to build upon. This blockchain infrastructure is even open source so developers in the future will be able to build their own apps on top of it. If I had to compare it to something we have today, I would say it’s like Ethereum. This is because developers can build on top of the ethereum blockchain today to tackle any issue they see fit. It’s kind of like building an app to run and operate on iOS for the Apple iPhone except we’re talking about Blockchain.
There’s one hoop Facebook has to jump through though. The U.S. Government. And they don’t like the Libra idea one bit.
The reasons are the same reasons I mentioned above. Facebook isn’t the most trustworthy organization and cryptocurrency (let alone any modern technological advances) isn’t congress’ forte.
Remembering back to when congress grilled Mark Zuckerberg for more than 10 hours in 2018? It was clear that congress had little idea how Facebook even generated revenue. When asked to respond to that question, Zuckerberg replied that Facebook runs ads. To many of the senators dismay, they thought this was a snarky response not fully understanding that an online website such as Facebook generates its revenue through advertisements.
This goes to show how inadequately armed congress is to even comprehend the simplest topics within the online landscape, let alone blockchain technology.
The U.S. government responded quickly and fiercely to the Libra project with the Secretary of Treasury Steve Mnuchin calling it a “national security issue”, the President of the United State tweeting that bitcoin is “based on thin” air (does this guy even know how our current monetary system is set up and that the U.S. Dollar is also based on thin air?), and other elected government officials such as Democratic Representative Maxine Waters drafting legislation to stop Facebook dead in its tracks with implementing Libra.
These actions and this rhetoric is a clear example of congress trying to stop the train to figure out how it works before it can regulate it. Congress is usually slow to move with many aspects of governmental regulation and so it needs time to learn the technology and how to best regulate Facebook as not only a social media platform, but as a member and head of a global blockchain oriented payment system.
I believe Facebook is experienced and intelligent enough to have known this was going to be the response of the U.S. Government. They have done their part and have come forward with their technology. Now they play the waiting game until Congress catches up. It could be years. But I really believe Facebook knows this.
They don’t care.
As long as their the First to bring forward mass adoption of a blockchain based currency payment system that’s all the matters. And even if it takes years for Congress to respond with a tangible response, this is still a victory for Facebook because they came forward first and early.
Facebook in many ways is not only promoting its own cryptocurrency, but is promoting all cryptocurrencies by forcing our leaders in government to talk about it. Without meaningful regulation, mass adoption of cryptocurrencies will never be possible. This was an important step to take in the long process of implementing clear guidelines in how we are to adopt a global blockchain payment solution. It’s a good thing we finally got started.