A couple of weeks ago we took a look at how some big multinational corporations and tech giants were pondering their possibilities of entering the cryptocurrency landscape via investments, research funding or simply creating their own token to compete with the likes of Bitcoin and Ethereum.
But one of those examples has been more closely followed by the public than the others because of two factors: one is the huge userbase of Facebook (2.4 billion compared to Bitcoin’s 30 million), which could be the popularity boost that the cryptocurrency market has strived to get, and the other is the recent problems regarding their handling of user data and privacy.
With the recent announcements of what they call Project Libra and how it might end up being externally managed, it seems like the perfect time to revisit the topic and analyze the good, the bad and the ugly of such a massive platform releasing an online payment method.
Existing Precedents
Most people outside analysts don’t seem to remember that Facebook has already tried their luck on entering this market. In 2009, they began the alpha test phase for their internal payment method for payments and apps based on the platform, which would then launch in January 2011, discontinued in June 2012 and officially removed from the site in September 2013.
Some aspects that Facebook probably learnt about during the lifespan of Credits were that implementation should not be limited to only in-platform payments and services, because that puts a heavy boundary on their possible uses which, simultaneously, discourages developers into implementing it.
There’s also a less known attempt to digitize money in the form of Facebook Gifts. Starting from September 2012, users could purchase goods and services from popular retail shops or brands and send them to their friends as gifts for any occasion. It was discontinued in 2014, but it might have served its purpose into giving Facebook a reputation with the supported businesses and brands.
A Final Effort
Back in December 2018, Facebook announced that they would be developing their own cryptocurrency, taking the world by surprise and gaining a place in the scope of every analyst and enthusiast ever since.
We already reported on the announcements made back in April, and pondered if Facebook would take advantage on the encryption technology that was implemented for WhatsApp messages and whether they would develop a centralized or decentralized currency.
Image from akeo.tech
A little more than two months have passed and now we have more details on Project Libra. We know that the reports from the BBC calling it “GlobalCoin” were false and that Facebook registered a company under the name “Libra Network” in Switzerland, which points to them simply keeping the name Libra for the final product.
What the BBC was right about, however, is that it will be a stablecoin, pegging its value to different fiat currencies in order to bypass the extremely high volatility that accompanies other cryptocurrencies. What currencies will Facebook tether Libra to is still uncertain, but a report from TechCrunch predicts a multi-tethered model.
Another report touches on the subject of centralization, and how Facebook is apparently offering other companies to manage a single node by the not-so-modest sum of $10 million, which can add up to great sums if the public seems interested. This also works in favor of Facebook’s image after their controversy regarding user data management from last year, which left people all around the world with a negative image regarding the platform that would only be amplified with their personal money coming into the picture.
Reports like this will keep coming out as we learn more on Facebook’s project, and the best thing we can do is to gauge the public’s response to those announcements to figure out if people will be willing to trust the tech powerhouse on this one.