Economy

What is Facebook's New Currency and Why You Should Care

It finally happened; Facebook has launched its own cryptocurrency, called Libra. The currency is backed by several big payment companies including MasterCard and Visa, as well as Spotify and even Uber. Facebook has some high hopes for the coin, which they say will provide cheap and accessible financial services to the world, giving the 1.7 billion people without bank accounts a way to manage their finances. 

The currency is set up under the subsidiary Calibra; a wallet used to handle cryptocurrency dealings. It will be managed by an independent non-profit group called the “Libra Association,” which is made up of founding companies who have all invested over $10 million into Libra, each. 

In a world with dozens, if not hundreds, of different cryptocurrencies, it’s hard to see why you should care. Here’s a closer look at what we know about Libra and why you should care about this one. 

  1. Libra is Super Accessible 

If you’ve tried to buy Bitcoin, you know how arduous and complicated the process is. Facebook has announced plans for a digital wallet for Libra – effectively a place where cryptocurrency is stored – that can be accessed through Messenger, WhatsApp, and a dedicated app called Calibra. The company issued a press release showing what the app might look like, but the real thing could look a lot different from this basic concept by the time it launches. 

  1. Facebook Doesn’t Have the Best History With Data 

Facebook has attempted to reassure people about data privacy by outsourcing management of the coin to the Libra Association. As mentioned before, it is managed by groups such as PayPal, Mastercard, and Visa, who all invested heavily in the project. Even so, Facebook doesn’t have the best history of proper data management. While Facebook assures us that they will keep social and financial data completely separate, there are still the questions surrounding their past of data mismanagement. Who’s to say it won’t happen again? 

  1. Calibra Doesn’t Share Information With Facebook Without Your Permission 

Mark Zuckerberg says that the information shared with Calibra is kept separate from anything you’ve shared with Facebook. Not sharing information will even be the default setting of the app. Of course, the app is going to ask if it can share information, though. Whether or not it does is entirely up to you. You don’t even need an account with Facebook to sign up for the service. 

  1. Facebook is in it for the Ad Revenue 

You may be wondering what’s in it for Facebook if everything is kept separate. Well, to put it simply, they are hoping to get more ad revenue. They want the businesses on Facebook to also adopt Libra, selling their goods to customers through Libra. If Libra can help to generate more sales, then those companies are sure to put more ads on Facebook. So, Facebook succeeds if Libra succeeds. 

Facebook is still cautious about the whole thing. They were keen to point out in their blog post that things could change between now and the time the coin is actually released in 2020. There’s a lot to be excited about though, and some things to be skeptical about. As is often the case, only time will tell. 

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