It’s politically popular to be a Libra skeptic, and it’s not hard to see why. Facebook has done itself few favours in recent years, seeing itself plagued by a series of PR crises that bring to mind a blackened version of King Midas’s touch. As a result, global regulators have responded to the idea of a “Facebook coin” exactly as you might expect, and it’s impossible to ignore the panic Libra’s announcement has incited.
But criticising is easy, building is hard, and it’s worth considering the broader impact that Libra could have. What could this new currency mean for consumers, incumbents and the existing universe of cryptocurrencies?
In China, the vast majority of consumer commerce runs on WeChat, which has transitioned from a simple chat app to a platform for just about everything. Most of the rest of the world lacks this kind of fully integrated experience, which is hugely valuable to the platform, but also a great experience for consumers: the convenience, access and range of available services is unparalleled.
Of course, the key to offering a fully-baked platform like this is scale, and Facebook has that in spades. The company has leveraged that scale time and again to launch new products to great success, even in cases where it lacks a first mover advantage. With Libra’s initial integration across WhatsApp and Messenger – and eventually, likely also Instagram – it could instantly be ready for use by billions. Imagine being able to zing money easily to friends and family across the world, irrespective of national boundaries. You might also be able to summon a taxi, order your dinner or apply for a small business loan, all on the same platform.
The core goal here is to give consumers a reason to bring their money to the platform and keep it there. This means bringing myriad services onboard, as each additional business that is added increases the stickiness of the platform. The higher the percentage of users on board, the higher the cost to both consumers and businesses of not being on the platform.
Does Libra pose a threat to bitcoin? Improbable. As bitcoin has moved away from its original vision as a payments network and towards becoming digital gold, it has carved out a distinct niche for itself. Other cryptocurrencies – Litecoin and Ripple come to mind – are much more likely to see their raison d'être called into question. But overall, traditional money services businesses such as Western Union or Moneygram (and, in many cases, even banks) are those with the most to lose – almost certainly to the vast benefit of consumers. If Libra is able to offer effectively the same service for a fraction of the cost, it’s likely to snap up market share, driving down costs for users around the world.
And Libra could in fact give a lift to other cryptocurrency projects. The project doesn’t try to obscure the fact that it’s built on a blockchain – the word is used all over the Libra website – so it stands to make a significant contribution in bringing this technology into the collective awareness. As consumers become increasingly comfortable with digital currencies, we could see a boost to the industry as a whole.
As a former Facebooker myself – who was pounding on the table about bitcoin and blockchains back when I was still there in 2013 – it’s exciting to see the company leading an effort that I believe will help bring cryptocurrencies into the hands of the next several billion users, doing a lot of good for them along the way.
Arianna Simpson is founder and managing partner at Autonomous Partners
This article was originally published by WIRED UK
