On June 18, 2019, Facebook officially announced plans for introducing its very own currency, Libra. Close observers of social media and cryptocurrency trends won’t be surprised by this news. For months, rumours were making rounds on the internet that Facebook was developing currency of their own to rival Bitcoin. However, very little was known about how the currency would operate in practice. Until now, that is. While there are still plenty of questions about how Facebook’s new currency will affect e-commerce sales, here’s a quick rundown of what we do know:
Libra: Similar To and Different From Bitcoin
The most obvious foil to Facebook’s Libra will be the cryptocurrency that started it all –– Bitcoin. While Libra will reportedly share some similarities with Bitcoin, it will also differ in several key ways. For one, Libra is based on a form of blockchain, but is more “centralized” than Bitcoin transactions. Secondly, Libra will operate on a 1:1 ratio with the US dollar in order to avoid some of the major fluctuations that affect cryptocurrency stocks. And lastly, Facebook is branding its currency as a “stablecoin” in an apparent reference to other cryptocurrencies perceived volatility.
If their choice of partners is any indication, Facebook is serious about making their currency a mainstream success. In addition to teaming up with PayPal and MasterCard, Facebook has also brought in major corporations like Spotify and Uber. And Libra will be run by a consortium of different companies.
How Will Libra Work?
It’s difficult to know exactly how easy or difficult it will be to use Libra to make purchases online because, well, no one has done it yet. Furthermore, Libra won’t launch until sometime in 2020, so it will be a little while before the currency hits the market. Some reports state that exchanging Libra currency will be as simple as sending a Facebook message. Additionally, there are talks of retailers and B2B businesses incorporating alternative payment options like Libra within their e-commerce stores. So it’s possible that you may be able to buy barricades from a business like OTW Safety using Libra one day, for example.
Will People Really Use Libra?
It’s an understatement to say that Facebook’s reputation has taken a few hits in recent years. Indeed, public trust in Facebook was recently at an all-time low. This, of course, begs the question: if people don’t trust Facebook with their personal information, why will they trust Facebook with their money?
To address this issue, Facebook has created Calibra, a subsidiary designed to separate the social and financial aspects of Facebook. Still, it’s understandable for many to question the viability of Facebook’s latest venture.
At the end of the day, only time will tell if Libra becomes a success or failure. It is worth noting, though, that initial reports have been favourable. Many prognosticators believe that Libra will hit the ground running, and Facebook stock enjoyed a bump when Libra was announced.
It’s difficult to say exactly how Libra will affect e-commerce transactions at the moment. However, it would be wise for business owners in all fields to monitor this situation closely. As mentioned above, major corporations like Spotify and Uber are currently teamed up with Facebook to support Libra. And it’s entirely possible that retailers and B2C companies will have to adjust their sales techniques to reflect Libra’s possibilities.
One thing is for sure though; Facebook has ploughed a significant amount of time, money, and resources into this project, and Facebook leaders seem intent on both competing with traditional and non-traditional currencies through Libra. To dismiss this now would be a mistake.