Facebook’s Entry Into Cryptocurrency Could Make the Market Soar
In its effort for world dominance, Facebook, Inc. (NASDAQ:FB) is now going to add a new cryptocurrency, Libra, to its company. This means the social media giant is now officially looking to become a world bank of sorts, and that holds huge implications, both for FB stock and for the cryptocurrency market.
So what is Libra?
The new cryptocurrency, which was just announced by Facebook, will be publicly available by 2020. It will be operated by Calibra, a newly formed subsidiary of Facebook, with the goal to, “provide financial services that will let people access and participate in the Libra network.” (Source: “Coming in 2020: Calibra,” Facebook Newsroom, June 18, 2019.)
Significantly, Facebook’s press release noted that this will be the first product that Calibra releases, with more global financial services potentially on the way.
Libra, Facebook’s cryptocurrency, will be powered by blockchain and makes similar claims to privacy that many other cryptocurrencies promise. Many may see the irony in this, what with Facebook being perhaps one of the most notoriously loose companies when it comes to protecting user data. But that’s a discussion for another time.
Facebook makes a point to say that Libra will be integrated across “Messenger” and “WhatsApp,” as well as operate as a standalone app.
This is huge. After all, Facebook remains one of the most popular social media services in the world, with over one billion users. Simple and easy-to-use integration into Facebook services would help jump-start Libra adoption around the world.
The company is looking to provide easy funding to businesses worldwide, as well as cut out middlemen who take fees on remittances from migrants to their origin countries.
The idea here is to turn people’s smartphones—already loaded up with one or several of Facebook’s apps—into digital wallets, allowing easy integration and adoption of Libra. That is something that many other cryptocurrencies have struggled to achieve.
For instance, ask the layperson about Bitcoin wallets, blockchains, encryptions, and mining, and their eyes will likely glaze over.
If Facebook, however, can deliver Libra in a way that is both accessible and easily understandable to the general public, the company may have a real winner on its hands.
Facebook promises that, from the start, you’ll be able to send Libra
to almost anyone with a smartphone, as easily and instantly as you might send a text message and at low to no cost. And, in time, we hope to offer additional services for people and businesses, like paying bills with the push of a button, buying a cup of coffee with the scan of a code or riding your local public transit without needing to carry cash or a metro pass.
If Facebook, Inc. can deliver on this promise, then it’s about to radically redefine the cryptocurrency game.
After all, one of the major knocks against cryptocurrency is the lack of security; these digital bucks are tied to nothing more than faith and goodwill. Facebook, on the other hand, is a multi-billion-dollar global corporation with very lucrative assets that can, to a certain degree, guarantee this currency’s validity.
So if the company is successful in making Libra as user-friendly and smooth as it promises, we could see Facebook stock enter a whole new era of dominance. Meanwhile, the cryptocurrency market at large will be greatly bolstered.
There are some concerns, however, like Facebook’s previous run-ins with privacy violations. The company promises to protect privacy, but does admit that, in “limited cases,” Calibra will share account information or financial data with Facebook or other third-party consumers.
Considering that cryptocurrencies’ biggest supporters are often people who love the privacy aspect of digital dollars, this could be a sticking point. Other than that issue, however, Libra could be a home run for FB stock.
Facebook is hoping to redefine the cryptocurrency market with Libra.
If the company is able to successfully integrate it across apps and platforms, then we could be witnessing the birth of a new global currency. And that would likely send FB stock soaring.