Libra – The Future of Cryptocurrency

What is Libra

Libra’s designed as a digital currency projected to be the new form of money. The main objective of Libra is to become the world’s singular medium of exchange, granting individuals across the globe the ability to transact in a matter of seconds.

As a founding member of The Libra Association, Facebook will be able to tap into its current global user base of roughly 2.4 billion individuals and have access to 1/3 of the world’s total population from day one. This means that with the click of a button, you can send or receive money to just about anyone you know anywhere in the world, for free. You will be able to grab an Uber or Lyft with the Libra currency, sell goods on eBay or even grab a slice of pizza at your favorite restaurant without cash or credit.

Calibra Digital Wallet

To send, spend or receive Libra, you will need a digital wallet, and that is where Facebook’s Calibra comes in. You can think of Calibra in the same terms of Venmo, PayPal, Cash App or Zelle. The primary difference in the technologies are the fees on sending money and the restrictions on sending money to individuals in certain geological regions. When transferring Libra, simply “tap” to send to just about anyone, anywhere, at any time for little to no cost.

Calibra Digital Wallet
Calibra Digital Wallet

Although the Calibra wallet logs each transaction that you make, Facebook states that “Your transaction activity is private and we will never post it publicly.”, what does this truly mean?

By having access to your spending patterns and history, Facebook will be able to know where every dollar you spend goes. Combine that the fact that Facebook also tracks every action that you have ever made on its platform, they will be able to predict with a high level of certainty where your next dollar will go. This information can potentially be used to predict the perfect time to send you an advertisement or could also be used against you in a court of law.

The Libra Association

Although Facebook may be the figurehead of the Libra currency, The Libra Association is the governing body that will administer the currency. The Libra Association is an independent, not-for-profit membership organization, headquartered in Geneva, Switzerland.

The Libra Association
The Libra Associations currently boasts an impressive cohort of power players, with goals of reaching over a hundred global founding members before its launch.

Without getting into too many details, some of the founding members include household names like Visa, Mastercard, PayPal (Venmo), Uber, Lyft, eBay and Spotify. Going out on a limb, all millennials should be familiar with at least 1 of these companies, and more likely use the services of these companies each day. The main goal of this collective is to bring their paying customers into the Libra ecosphere by leveraging their brand, public trust, and current suite of mobile features.

Target Audience

Smart Phone Users

The most daunting idea about Libra is that just about anyone with a smartphone can gain access to Libra, and it’s Calibra wallet. Verifying your identity using a government-issued ID through the app or online signs you up for the system. This means that in the slim chance that you don’t use Facebook, WhatsApp or Facebook Messenger, you will still be able to join in on the action. Availability for smartphone users, which population stands at staggering 2.5 billion and opening access for traditional computer browsers users stands as the greatest proponent of the currency and wallet.

Smartphone Users
Smartphone users and the underbanked could prove to be the key to success for the Libra currency and it’s corresponding Calibra digital wallet.

Developing Countries

Individuals in developing countries don’t have the same access financial services available to the majority of American and European citizens. Individuals who don’t have access to bank accounts, or are forced to use alternative forms of financial services to transact money are considered the unbanked and the underbanked. For one reason or another, these individuals may willingly choose not to participate in traditional banking opportunities or may not understand the basic principles of financial literacy. Mass adoption of this population is dependent on Facebook’s ability to convert these individuals into Calibra users.

Business

To succeed and become profitable, every business will eventually need to find a way to seamlessly collect and process payments in real-time. More often than not, failure to accept certain forms of payment leads to lost revenue. This happens when you encounter a “Cash Only” establishment, a business that does not accept American Express or proprietor that has transitioned into a “Cashless” company. From day one, Libra can potentially be used as the answer to all of the above dilemmas by. Thus allowing business owners to collect instant payments online or in-store from patrons all over the world, not just in their local currency.

Competition

The Libra Association
Fierce competition, established financial institutions and pending regulatory approval may prove to be critical components for the potential success or failure of the Libra currency.

The Government

Before universal acceptance of Libra is possible, The Libra association needs regulatory approval by governments from all over the world. This process will be rigorous and may potentially water down some of the primary benefits that Libra has set out to achieve. Governments want to step in and regulate The Libra Association because if The Association can establish a new world currency then governments will lose out on potential tax revenues. If governments are no longer able to track and tax the taxable gains and wages of their citizens they will cease to exist.

The Federal Reserve

According to the Fed’s website, as of December 23, 1913, the fed was established “by the Congress to provide the nation with a safer, more flexible, and more stable monetary and financial system.” One of the Fed’s primary responsibilities is to “[conduct] the nation’s monetary policy by influencing money and credit conditions in the economy in pursuit of full employment and stable prices.” The Fed will have a harder time influencing monetary policy if The Libra Association has control of the world’s currency. Libra threatens the Fed’s ability to influence the economy, through monetary policy.

Banks & Financial Institutions

Although banks from around the globe vary in size, service, and specialty, at a high level every bank’s purpose is to serve as a trusted institution for sending, storing and exchanging their customer’s funds. Libra will be able to do each one of these things and more efficiently and effectively for little to no cost. It’s a no brainer that the entire idea of digital currencies will significantly affect the bottom line of all banks in the financial services industry. Combine this with the fact that eventually after mass adoption, Calibra can be used as a medium to loan funds to wallet holders. Banks have been put on notice about the ambitions of Facebook and The Libra Association.

Cryptocurrency

Since libra will be considered a traditional cryptocurrency, it will immediately take market share away from current popular forms of crypto like Bitcoin, Litecoin, Ethereum, and Ripple. Faster processing times, scalable infrastructure, and enhanced security features are determining factors in putting legacy cryptocurrency out of business overnight. Broad acceptance of Libra and potentially billions of transactions taking place at once instantly dwarf the capabilities of Bitcoin and Ethereum.

Privacy Concerns

Although the Libra Association will be collectively taking charge of the Libra initiative, many people are wary about Facebook’s involvement in the project. Facebook has had a history of failing to safeguard the private and public information of its user base.

David Marcus, Head of Calibra, at a Senate Banking Committee hearing discussing Facebook's planned Libra currency.
David Marcus, Head of Calibra, at a Senate Banking Committee hearing discussing Facebook’s planned Libra currency.

Since data is Facebooks most valuable asset, having access to the spending history of billions of individuals will theoretically be the last piece of the puzzle. Currently, Facebook can sell to its advertising partners demographics and the projected buying profiles of every individual on the platform. Facebook has vowed to not sell the spending information of its Calibra users to advertisers, but only time will tell if they can keep this promise as shareholders keep an eye on its share price and profitability. The question everyone is thinking now, will the public trust them this time around?

So What’s the Big Deal?

At this point, a one-world currency, once thought to be an impossible idea is not too far away from reality. Technology, globalization and a need for a more efficient financial system for all have pushed Libra to the forefront of innovation. The question of the future may not be cash or credit, rather what’s in your digital wallet?

Libra Logo
Libra – “What’s in your digital wallet?”

Libra White Paper

The Libra White Paper provides more in-depth information about the currency and the proposed intentions. The white paper outlines in detail the Libra Currency, Blockchain, Reserve, Association and the potential future uses of the cryptocurrency. You can also signup to be one of the first Calibra users here.