Why cryptosphere ‘likes’ Facebook currency move
Every now and then, something happens that will change how business is done and how we as customers, consumers or providers interact with each other.
Forty-odd years ago, the cash machine came to a high street near you. This innovation allowed us to withdraw real money without having to stand in a queue at the branch. Now they are commonplace.
Direct debits, standing orders and digital banking are innovations that allow us to pay bills and move money easily. But there will soon be a new kid on the block. However, unlike other kids, this one already has 2.4 billion users.
Facebook is launching its own little bank. Not a bank as we would know it, with branches, loans, mortgages etc. But a bank with its own currency. Perhaps more like
a small country built in the cloud with its own currency and vaults. Project Libra, as it is known internally, is about to go live. It will change how we do business – forever.
Facebook has had its fair share of problems over the last year. Its dominance over other social media networks has been brought negatively into sharp focus. It has been characterised as the big bad bogey man of data. Its CEO, Mark Zuckerberg, is no longer the darling of big institutional investors, many of whom want to see the back of him. So the timing is right for the leadership team at Facebook to get back in the game of generating massive shareholder value. Project Libra has been designed for exactly that purpose.
The technology itself is not earth-shattering. What Facebook has done is create a stablecoin that will anchor itself to an array of currencies, securities and financial organisations. A stablecoin is essentially a cryptocurrency that has been designed to minimise volatility. It does this by pegging itself to a basket of assets, thus providing stability and less chance of being hyped up or manipulated. In the crypto world, it is seen as a sell-out as it is centralised. But this is exactly why Facebook has adopted this methodology. It does not want to see the spikes and dips of the decentralised cryptocurrency markets. By bringing its own to the world, Facebook is actually adding credence to the whole cryptosphere.
Over the last four weeks, as the launch date of the new Facebook crypto nears, Bitcoin has risen more than 14 per cent. It seems that digital investors are excited about what Facebook is doing. This has raised sentiment and expectations as cryptocurrency users now feel that they are no longer seen as outsiders, nerds or fraudsters. Facebook is providing cryptocurrency with legitimacy. How will this translate into a global operating rhythm?
Buying any cryptocurrency these days is not an easy, straightforward process. Millions of people around the globe do not have bank accounts as we recognise them. So, while they may wish to get their hands on a cryptocurrency like Bitcoin, it is just not physically or digitally possible. Until now…
As Facebook introduces its cryptocurrency to the world, what has been a very tight-knit community of digital-savvy investors and speculators immediately becomes mainstream. Facebook users will be able to buy and trade this currency on the platform as well as Whatsapp and Messenger. It will have a value that is locked in and can then be traded elsewhere to access other digital currency. This is why the cryptosphere is buzzing.
Imagine millions of people now with easy access to the likes of Bitcoin, who never before could dream of owning a small piece of this digital coin. The market size could grow exponentially as new incoming speculators grab a piece of ‘digital gold’. This is where businesses will have to react, adapt and change.
How people pay for things on Facebook and elsewhere will evolve. There is a learning curve ahead for businesses and customers.
Things are about to change seismically and businesses that do their research will have a better chance of success.
Jim Duffy MBE, Create Special.
Users feel they are no longer seen as outsiders,
nerds or fraudsters