Blockchain technology got a massive boom in 2017 raising the market cap to 770B before crashing to sub 130B within 18months. Majority of the growth was based on the hype with little or no substance to back it up & when the sale begins there wasn’t any fundamentals to support the price. We heard about big names getting into the game but none of them actually made it to mainstream in terms of products.
While dump really hurt the growth, it also stalled any major corporation interest in the space. While bitcoin has almost done 3X within spam of 4 months, we heard the news of Libracoin, a cryptocurrency effort by world largest social media giant Facebook. Skepticism aside, just an official effort from such major corporation is a big win for the industry which has more cons than pros. I’ve not disectd the paper at length but have been asked by many friends on what does it mean for the bitcoin.
As mentioned earlier, it’s in the interest of cryptocurrency since facebook has the maximum market penetration in the entire world. As of Q1’19, they have 2.38 Billion active users. No other organization or country have that kind of market reach or distribution across the planet. With them making it super simple for their users to on & off-ramp the cryptocurrency is massive. Gone are the times where Facebook was limited to sharing photos & statuses. Now it’s a complete media platform for businesses and individuals which isn’t just limited to connecting but a serious amount of commerce happens through it.
Messenger is one the most popular application of facebook with mind blowing usage.
Here are the key statistics:
- 20 billion messages are sent between people and businesses every month
- There are 300,000 active Messenger bots on the platform
- Messenger is the second most popular iOS app of all time – behind only the main Facebook app
- 1.3 Billion people use Messenger every month
- 40 Million active businesses
No other company have statistics even close to this when it comes to engagement.
Today, Facebook is not only a social media landscape rather it is the entire virtual world where from promotion to status updates to managing your own business pages can happen. And as sending messages from one place to another one is possible; the future holds a hope for something similar for payment transactions too.
Today Facebook has merged E-commerce industry into its layout and offers promotion, buying and selling of products/services. Now, imagine the payment methods used in today’s transaction; everything happens via bank, right? The digital wave has although transformed the mode of payment, but the infrastructure still stays the same: Centralized banking channels. Although, the payment method of e-commerce industry is done by banking sector today, but it will be transformed into digital currency soon. In fact, some e-commerce websites are accepting digital currency in their payment sections.
Since, Facebook is supporting a large network of e-commerce industry, it is possible that Facebook coin would be supported and promoted by e-commerce industry. Recently, Facebook has launched a new blockchain based currency named “Libra” on a platform called “Calibra”. This would support cross border transactions with the help of blockchain and that too instantly and at extremely cheaper rates.
With the announcement, the stock price of Facebook has surged 20% cumulatively and had a very positive impact on the current crypto industry as well where the bitcoin has surpassed USD11,000 resistance for the first time in 2019. Now coming back to Facebook. Well, public also get conscious upon the discussion of any new currency. A currency backed by the centralized party; I feel, it would be hot discussion.
Facebook has got its maximum possible market share; Facebook just had to maintain that market share as expansion of can’t be done within the same industry now. So, the company with the highest market penetration can use the same to become a financial institution as well. By launching a Facebook coin, it will not only get the connectivity, but it will also get the more market share in the industry of digital currency.
The aim of Facebook is to connect people onto the single platform by which users will be able to use their every account from a single username. That is why Facebook is keep monitoring and is supporting only real accounts rather than fake accounts; for promotion and connectivity, Facebook is also completing the Corporate social responsibility (CSR). As, Facebook is providing free Internet service in the developing nations so that these nations can also get connected with the world.
Well, Facebook has the most active users in the world; so, ideally everybody has a single real account. Facebook is promoting/supporting this through connecting people’s different account onto the singular platform (User Id) through which Facebook can get to know the psychographic/physical factors of its users.
Like, in terms of applications, Facebook has connected itself with Instagram, WhatsApp, etc. Only, payment/currency sector is not connected with it. But Facebook will also attach currency with it as the company is getting the utmost benefits from blockchain technology. Facebook Coin will not be only promoted by the e-commerce industry, but it will also be transformed as the bank accounts. From currency accounts to entertainment/business profiles would be onto the singular platform by the single User Id.
They’ve the most information on what’s happening in the world but that’s not enough especially with the outlash they’ve been getting around privacy and selling data to advertisers. In addition there is a limit to how many people can be on facebook and they’re approaching that limit very quickly. There isn’t enough people on the planet. With Mark’s pledge to prioritize privacy combined with stalled growth it has to come up with new avenues to earn revenue and I think that’s where the idea of Libra is brilliant. They have the opportunity to become the world largest financial institute and payment process. They’ve access to people in regions which is almost impossible to others to get. Kids get a facebook account way before their bank accounts and I am confident a decent percentage of their users don’t have any bank account at the moment. With facebook, issue of Cash-in & Cash-out is solved and if it becomes a global standard money may not even leave the system giving it such a tremendous amount of capital that can turn it into the world most powerful empire.
With such fears there is some resistance from regulators in terms of who can sense of bit of fear if that happens. While there has been some serious questions posed by thee bitcoin maximalists, that’s a minor issue in my opinion at this point in time so let’s see how things progress
RANDOM FACT: I am also LIBRA by star !
Here is the official link to Libra