There was one crucial problem, which plagued cryptocurrencies. It was not mainstream enough! According to statistics, there are only 2.5 million people in the world, who own, sell or trade cryptocurrencies. This is a rather small number. In other words, most national governments and financial institutions have never fully felt threatened enough because of the limited number of people involved with cryptocurrencies. However, all that changed when Facebook, with its 3 billion strong networks announced the creation of its new cryptocurrency, Facebook Libra!
In this article, we are going to discuss some important points about Libra. We are also going to look at why skeptics are hopeful about Libra’s success where other cryptocurrencies have failed.
Whom is Facebook going to target with Libra (Target Audience)
The white paper released by Facebook for people to understand Libra spoke about a particular section of the population called the ‘unbanked’.
These people do not have access to a bank account. According to Business Insider, more than 2 billion people all over the world do not have a bank account. The aim of Libra and Facebook is to bring this population under some form of formal finance.
We should remember that Facebook is a massive enterprise. Through Facebook and WhatsApp, the platform is capable of reaching billions of active users every single day. This is why even the most hardened cynics of cryptocurrencies feel that Libra is going to be successful.
It should be pointed out that Facebook wants to target South and South East Asia with Libra first. This is because India alone has over 400 million active WhatsApp users. This is more than the population of many countries in the world.
According to McKinsey, if the unbanked people in the region are integrated into the banking or financial economy, it would add $52 Billion dollars in this region alone.
Is Facebook Libra similar to other cryptocurrencies like Bitcoin?
The answer to this question is both a ‘yes’ and a ‘no’.
The technology that runs Bitcoin and other cryptocurrencies are Blockchain. In essence, this technology is completely decentralized. Meaning it works on a peer-to-peer basis, with no third-party interference. This is what makes it secure, safe and anti-hack.
Libra, on the other hand, is not completely decentralized in nature. Here, the Facebook Libra Association- a group of 27 tech and finance companies will monitor the transactions. This also means that no one member out of the 27 will be able to dictate how specific transactions work. Rather, it will require a cumulative consent or dissent from all 27 members.
Therefore, in some ways, this is also a decentralized system.
One more cause for concern when it came to cryptocurrencies was volatility. Bitcoin has fluctuated anywhere between $1000 USD to $20000 USD. These are massive swings. With Libra, Facebook wants to check and control that volatility.
It aims to do so, by making Libra a stable coin, backed by some real-world assets put in place by the 27-member Libra Association. This includes physical funds, securities, assets and other measures to make the digital currency as stable as possible.
How are Governments and Financial Institutions reacting to Facebook’s Libra?
Facebook has been in the news for all the wrong reasons recently. From being accused of exposing data to influencing general elections, almost all governments and lenders are wary of facebook Libra.
This is because generating currency is a sovereign power vested in national governments. The Facebook Libra is going to bypass several financial norms and rules when it comes to money matters. Most EU governments have expressed strong resentment against Zuckerberg and his idea.
They believe Facebook along with its other corporations like Instagram and WhatsApp is already too big of a monopoly. They fear that Facebook Libra will end up compromising financial stability and bring uncertainty.
There is also a question of privacy and data breaches. However, Facebook has been very smart to present its entity as a completely decentralized one. It just has one vote in the facebook Libra association, like the other 26 members. It has also promised never to share data between facebook Libra and other Facebook-owned companies.
According to many people, Facebook Libra is going to change the cryptocurrency world forever. It might also change the global financial systems, as we know it. Many people have already started trading in Libra and earning quite handsomely in the process. If you wish to know more about trading in Libra cryptocurrency, you can contact support.