South Florida Sun-Sentinel Palm Beach (Sunday)
THE TRUTH ABOUT LIBRA B
Facebook’s new digital currency could be key to corporate immortality
y now you’ve probably heard about Libra, the global digital currency that Facebook recently announced plans to develop.
This past summer, the internet went ablaze trying to explain what Libra “really” is. A true cryptocurrency? A potential threat to the global financial system? An innocent attempt to bring innovative fintech options to developing nations where banks are ripping people off?
Libra might be all of these things, or philosophical book on the subject none. We won’t know until 2020, when (titled, simply, “Money”), certainly sees Facebook plans to launch it, if it it this way. launches it at all. But if Facebook suc“Facebook’s business is analogous to ceeds even modestly with its plans for the economics of money,” he says. “My Libra, everyone could be affected. use of dollars is not a function of
Boasting 2.7 billion monthly users whether I like dollars or not—its value across four world-eating platforms resides in its use by others. That’s how (Messenger, Instagram, WhatsApp, social media works.” Those “lists of and Facebook itself ), Mark Zuckernumbers” don’t represent anything of berg’s social networking business is the value, like bars of gold; they literally are biggest on Earth. Threats to the comthe value, just like the numbers of likes pany now come from within, on an Instagram post. including illicit data harvestOf course, what makes ing by Cambridge Analytica money so valuable isn’t just its and election interference by socialness, but the fact that it’s Russian operatives. These linked to the real world. You aren’t run-of-the-mill busican exchange likes by the ness problems; they’re emthousands on Facebook but pire problems. you can’t get them “out” and
Facebook needs to get its exchange them for food. What house in order, fast, while if you could? still positioning itself for If Facebook could engineer further growth. Historically, Facebook a social network in which tokens behas fueled its own growth via conquest: haved more like dollars than likes, and I came, I saw, I bought WhatsApp for got a critical mass of people to use it, $22 billion. Facebook wants to endure, many of them might come to depend but there are no networks left for it to on that network to meet their realkill, create or absorb that would help world needs. solve its problems. That dependence is Facebook’s
Except one: the world’s oldest social endgame. networking technology. It’s already “If you’re a social network, whatever used everywhere on Earth, and there’s you’re doing has to be about getting no opting out. It’s called money. people to stay as long as possible in this
Once the modern world stopped virtual world that you’ve built,” says pegging the value of paper currency to Will Graylin, a former global co-GM of the price of gold, “money” became Samsung Pay. If Facebook can bring a little more than a consensual hallucidigital currency into existence on its nation — an agreement among people own terms and see that it gets masthat intrinsically worthless tokens of sively adopted, it’ll have a shot at information have value just because achieving corporate immortality. everyone believes it. In other words: a But how? After all, Facebook won’t social network! technically control Libra. That will be
Eric Lonergan, an economist, hedge the job of the Libra Association, a nonfund manager, and author of a 2009 profit “member organization” based in Switzerland and ultimately composed of 100 companies.
The House of Zuck will only have one vote at this big table, as a way to engender trust in the system despite Facebook’s checkered past. However, in a June interview with tech news site The Information, Facebook’s David Marcus confirmed that the Libra Association’s current top executives are on Facebook’s payroll. And while Libra’s code is open-source, Facebook’s engineers are doing the bulk of the work of building the system.
If Libra does launch, Calibra — the digital-wallet subsidiary that will be 100% owned and controlled by Facebook — will become the on-ramp for almost everyone who wants to use the currency. “We’ll build Calibra into Messenger and WhatsApp, and all of the basic functionality will be there (at launch),” says Kevin Weil, Calibra’s vice president of product.
Technically, anyone can develop a wallet to handle the open-source Libra currency. But Facebook expects its default option to be quite popular. “I expect the vast majority of people are going to use (Calibra) from within (existing Facebook apps), just because billions of people use those products every day,” Weil says.
The app will start off “really, really simple,” according to Weil — just a wallet to hold and send Libra coins. But Libra is no Bitcoin — it’s actually got more in common with Ethereum, a less-infamous but more conceptually sophisticated cryptocurrency platform designed to make money not just digital but programmable by anyone writing code that runs on the system. Which means Calibra could soon handle all kinds of finance-related tasks, from paying bills to managing “smart contracts.”
Facebook wants to keep doing what it’s always done best — social networking — except in a form that’s both as big as possible, and as close to permanent as possible. Libra is Facebook’s shot at getting there. And it might be the only one left for it to take.