Facebook has become a household name throughout the world
Today, it is seemingly impossible to find someone that has not heard of Facebook. Whether you associate it with the recent high profile lawsuits in the headlines or you are an everyday user or anywhere in between. Others could argue that Facebook has pioneered and mastered the global connection, as they are reaching two (2) billion users worldwide. Detractors may say that it is the root of scandal, a contributor for divisiveness, and the primary cause of the breaches of your privacy which many Americans still hold dear. Regardless of your personal perspective, it is undeniable that the tech/social media giant has taken another big leap forward in bringing billions together through its new form of digital currency named; Libra.
¹ “Libra is a permissioned blockchain digital currency proposed by the American social media company Facebook. The project, currency and transactions are to be managed and cryptographically entrusted to the Libra Association, a membership organization founded by Facebook’s subsidiary Calibra and 27 others across payment, technology, telecommunication, online marketplace, venture capital and nonprofits.”
Yes, you read that correct…Facebook’s newest venture is a digital currency in the blockchain space that will operate similar to Paypal or Venmo and will in essence be cash on your phone or computer or other digital device that you can purchase via a wallet. Libra will act similar to cash, by exchanging your basket of currency for Libra virtual tokens you are able to use make purchases throughout the participating landscapes and Libra/Calibra will manage your account ledger.
We believe it is important to not only understand the similarities between Libra and Bitcoin (or other Cryptocurrencies), but also understand the differences. On the contrary, Cryptocurrencies, such as Bitcoin and Ethereum, allow and require that you manage your account yourself. This creates decentralization, rather than centralization. Thus, what differentiates Libra from digital currencies such as Bitcoin, is it has no 3rd party managing your money and or ledger. This decentralized structure allows Cryptocurrencies to potentially, (and possibly completely) disintermediate financial services altogether. By saying that, we mean that cryptocurrencies built on blockchain can potentially reduce or eliminate the people and companies that get between the producers of goods and services and consumers. This is a potential game-changer in terms of disrupting many industries, allowing new competitors easier market entry, and reducing consumer costs by cutting out what is often referred to as the “middleman.” Of course, as with any disrupter, this potential change would not come without many new problems created by Cryptocurrency, so we are not suggesting there are only upsides to cryptocurrency. Rather, we are detailing the lofty goals of Cryptocurrency in this article in order to highlight the difference between Cryptocurrency and Libra.
In stark contrast to the description of Cryptocurrency set forth in the previous paragraph, Facebook or a consortium that Facebook is part of, will be in charge of Libra. In other words, Facebook is very subtly using game-changing blockchain technology and using it to become the “middleman” in any Libra transaction, thus making themselves a revised version of a financial institution, rather than using blockchain technology to reduce the need for financial institutions (and, in doing so, reduce the cost of a transaction). Although Facebook is not presenting what it is doing with Libra as we are in this article, Facebook will, in fact, be in charge of your money, much as a bank would within the Facebook ecosystem.
¹“Libra (Cryptocurrency).” Wikipedia, Wikimedia Foundation, 18 July 2019, en.wikipedia.org/wiki/Libra_(cryptocurrency).
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