What Does Facebook’s Libra Mean for the Future of Cryptocurrency?
Facebook recently announced its plans for the new Libra cryptocurrency, which stands to make a major impact in both the crypto and fiat currency industries. With Libra, Facebook seeks to provide a stable cryptocurrency that will see adopters among some of the major online vendors of the world. If all goes as Facebook hopes, the cryptocurrency Libra will also open up new venues for online payment platforms, possibly competing with established companies like PayPal.
The Force Behind Libra
Whether or not the Libra coin takes off, it is certain that no cryptocurrency has had as high a profile in its launch as this one. Facebook has more than 2.38 billion users worldwide, but more than 1.7 billion people on the planet lack a bank account. That means that the Facebook Libra coin could open up brand new payment venues for billions of people, including those who are reluctant to work with traditional banks. In many ways, the Facebook Libra currency is designed to serve as a replacement for existing payment platforms like PayPal. Rather than deal with a lot of fees and bank transactions, people can use the Facebook Libra crypto coin to transfer money quickly, easily, and effectively.
How Libra Works
The Facebook Libra crypto coin works similarly to other cryptocurrencies: you buy Libra using your currency of choice and earn a specific number of Libra coins. From there, you can spend that cryptocurrency on products and services available with any company that accepts Facebook’s Libra as payment. In an attempt to increase the stability of the Libra coin, Facebook established the Libra Association. The 28 founding members each backed the project with a minimum of $10 million and earned a vote that can allow them to guide the future of Facebook’s Libra cryptocurrency. Libra is backed by bank deposits and short-term securities in an attempt to avoid the volatility that some cryptocurrencies experience.
Will Vendors Adopt Libra?
In the end, the only true measure of success for Facebook’s cryptocurrency will be whether vendors accept Libra as a valid form of payment. In an attempt to promote early adoption among high-profile vendors, Facebook is offering special incentives to those who accept Libra as payment for transactions. The primary hope behind these incentives is that several major online players, such as eBay and Spotify, will buy in. If they do that, the ability to use Libra in most major marketplaces will make the currency significantly useful and accepted almost worldwide. This may even open the door for other cryptocurrencies to follow suit, although Facebook sports an advantage of resources over potential competitors.
Facebook’s Libra project marks a potential turning point for the cryptocurrency industry as a whole. Never before has such an established business with as many resources as Facebook entered the industry with the intent to back a specific cryptocurrency. Those who run online crypto exchanges or who simply have a passing interest in the fate of the industry should watch Libra’s progress closely, as it may spell major changes for all cryptocurrencies.