Cryptocurrency seems to be the hot
topic of discussion in the world of finance these days. After all, after the
late 2017 early 2018 historic bitcoin boom which saw the price of the popular
cryptocurrency touch almost $20,000, crypto has become nothing short of an
international phenomenon. However, as we’ve discussed in our other cryptocurrency
focused articles, the hype around them has more than died down in the past year
or so, lending to the fact that the price has been consistently stabilizing
around $10,000 over the past few years, and little else noteworthy happening in
the realm of crypto. That is, until this past week where one of the biggest and
most significant companies in the world made a behemoth announcement.
Coming now unto the topic of
Facebook. You know Facebook, I know Facebook, and the whole world knows
Facebook. The absolute behemoth of a company started out with humble beginnings
as a cheap ‘hot-or-not’ knockoff. Completely unrecognizable from this early ‘beta’
phase, Facebook, while not the first ever social network, is an undeniable
pioneer of that field. Now, Facebook boasts over 1 billion accounts, and also
owns ‘Instagram’ which is certainly the most popular social media amongst
youths. Additionally, Facebook also owns ‘Oculus’ one of the firms making waves
in the realm of virtual reality. These acquisitions, along with other moves
Facebook has made steadily in the past half-decade, makes it evident that their
thinking is far beyond the traditional social media firm, and they display
genuine inquisitiveness about the tech spectrum as a whole.
So a question you definitely must
be asking by now is ‘what is the relation between cryptocurrency and Facebook’,
and that would be a good question indeed. Well, earlier this month, Facebooks
own Mark Zuckerberg announced in June 2019 that Libra, their very own
cryptocurrency, would hit the public in 2020. In this article, we’re going to
break down what exactly Libra is, and how it’s different from conventional
What is Libra?
There were murmurings going about
in early 2018 that Facebook was attempting to establish a Blockchain division,
but at this point, it was difficult to speculate that an entire cryptocurrency
was in the works, since a tech giant such as Facebook could have myriad uses
for a Blockchain infrastructure. In May 2018, these rumors were confirmed, and
more speculation started brewing as to what exactly Zuckerberg and his new team
were planning with the Blockchain. When ‘Libra Coin’ was announced, it was a
huge moment for both the company, and the public, as such a huge company
backing up a concept with so much stigma around it such as crypto is a bold and
brave move. Libra is in essence a traditional cryptocurrency, and uses a ledger
in a similar, but not entirely same way, on the Blockchain infrastructure.
Why is Libra Different?
The primary difference between
Libra and its competitors is how exactly it utilizes an infrastructure, and the
system that it’s built upon itself. Most cryptocurrencies, let’s take Bitcoin
for the sake of example, use a public ledger, which can be viewed and
contributed to by anyone and everyone in the world, this is known as a ‘permissionless’
system, and functions on the basic trust of all users of the cryptocurrency.
This is where the major difference in Libra comes in, Libra is a ‘permissioned’
system, wherein only a select few, decentralized figures can add to, or
construct blocks in the entire ledger. So in essence, it’s more like a digital
currency than a cryptocurrency itself.
Why is Facebook Investing in Crypto?
Facebook, as we’ve mentioned earlier,
is one of the biggest companies in the world, and are extremely curious when it
comes to other technologies, so if you look carefully, it’s not difficult to
see the connection. Specifically however, Facebook is playing it very smart by
targeting those who don’t have a bank account, and reassuring that bank
accounts will be a thing of the past should Libra catch on the way they intend
it to. Presently, over 2 billion adults in the world don’t have a bank account,
and Libra, using its not-so-revolutionary ‘mobile wallet’ structure, will make
it so the need for a bank account for any reasonable adult can be abolished.
Now, we just have to wait and see as to whether it will be implemented smoothly
enough to pull off this feat, or whether it’ll just be another one of those
technologies that will be forgotten and not missed a decade down the line.
Will Libra Make Waves?
The answer to this one is clear,
yes, obviously. In fact, it already has made waves. Libra broke into the
mainstream news, with pretty much every major outlet covering its unveiling
event. However, Libra has had an auxiliary effect which most places aren’t
talking about. Libra being described in the public as a cryptocurrency has
drawn a lot of attention back to the entire concept of crypto for the first
time in two to three years. This recirculation of attention is good for crypto
in general, and obviously Libra as well, as it will give it a chance to
distinguish itself from the hordes of cryptocurrencies and Bitcoin clones we’re
so sick and tired of hearing about. Facebook will also have the power to
influence its 1 billion users on the various platforms it owns to leverage a
certain number of usage of Libra, which no other crypto has had the luxury of
doing so far. All in all, if the cards are played right, the Libra could be the
next big thing in the world of tech and banking alike.
In conclusion, Facebook’s ‘Libra’
is certainly promising, but is built on a platform which many are predisposed
to dislike. However, being linked to such a prominent global brand might just
be the push needed by an e-currency to break into the mainstream, and maybe one
day, decentralize and democratize the world of finance and banking as a whole.
Until then, I guess we’re just going to have to wait and watch.