Facebook’s highly publicised plan to launch its own cryptocurrency, the Libra coin, next June has thrown cryptocurrencies into the spotlight, and led the banking industry and governments to sit up and take notice.
What is Libra?
Libra coin will provide a means of paying for goods and services globally online, without the need for bank accounts. The proposed launch of Libra raises questions about regulation and data security. The proposal has pushed regulation, and law around cryptocurrency generally, up the political agenda. This is positive, as it encourages greater control, better understanding and potentially wider adoption of cryptocurrency.
Although cryptocurrency has been around for over a decade, since Bitcoin was first introduced, it has mainly presented an investment opportunity rather than a means of purchasing. People bought it to sell later, hopefully at a large profit, but it was not easy to spend on goods due to its constantly fluctuating value and lack of physical notes and coins.
Despite this, it is possible to use a cryptocurrency ATM – if you can find one. There are not many around yet, but those who already own Bitcoin or other cryptocurrencies can trade at ATMs using a debit or credit card, and in some cases cash out their crypto funds too, converting them into physical money. It is anticipated that the cryptocurrency ATM market will grow by 56.9% over the next five years, reaching a market value of $147.9m by 2025.
Facebook’s Libra coin proposal could be a game changer, as its aim is different to other cryptocurrencies. Rather than existing as an investment opportunity, the purpose of Libra coin is to give greater access to online transactions to those who are currently unable to obtain financial services. This could help prevent pay day lenders and other money transfer services from taking advantage of people with less money through high fees and excessive interest rates.
As Libra is supported by investment from big businesses and financial institutions in the Libra Association, it will not be as prone to the price fluctuations that makes other cryptocurrencies so difficult to accept as a means of payment. This important difference means businesses may be happier to accept Libra coin as a legitimate and reliable means of paying for goods and services, as the value should remain much more stable.
By enabling people all over the world to buy goods and services instantly with minimum fees, Libra could be attractive to businesses, as customers anywhere could purchase online easily using Libra. Businesses could also find Facebook Advertising provides a great way to reach a global audience, making adoption of Libra and advertising on Facebook an attractive way to marketing goods and services.
Those who are concerned about Libra coin data being used for targeting Facebook ads should not worry too much. The two data sets will be kept completely separate, giving full protection to Libra users. It won’t even be necessary to have a Facebook account to use Libra, as users would set up a cryptocurrency wallet with Calibra.
Facebook’s plan is highly ambitious and is attracting much scrutiny from financial watchdogs and politicians, but if Libra coin does get the green light, it could kick start mass adoption of cryptocurrency in the future.
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