The world of cryptocurrency is certainly not known for its consistency or stability. In fact, it is quite the opposite.
So why in the world would Facebook founder and CEO Mark Zuckerberg want to put his social media giant right smack dab in the middle of crypto?
Well, on Tuesday, that’s just what happened as the company announced it was launching its own cryptocurrency, Libra, sometime in 2020.
And others have taken notice as payment companies like Mastercard, PayPal and Visa have joined with large tech companies like Uber and Spotify in investing in the new currency, according to Business Insider.
The intent of Libra is to help the nearly 1.7 billion people around the world who don’t have bank accounts get access to financial services — on the cheap. The allure also comes from the fact that Facebook plans to make its Libra digital wallet accessible on Facebook Messenger and WhatsApp, along with a new app called Calibra.
In dealing with a question of stability, Facebook and its partners announced the new currency will be backed by “a collection of low-volatility assets, such as bank deposits and short-term government securities in currencies from stable and reputable central banks,” according to a white paper statement quoted by Bloomberg.
Another interesting change is Facebook won’t be directly running Libra. All of the partner companies in the venture created a non-profit called the Libra Association which, according to The Associated Press, will be headquartered in Geneva, Switzerland, and governed by Swiss banking regulations.
Facebook started Tuesday trading strong, gaining 2.22% to $191.23 by 11 a.m.
Essentially, Facebook is trying to bridge the gap between digital currencies and traditional banking. What cryptos have hoped to do for years now is find a way to disrupt traditional banking, but not even Bitcoin has been successful.
Trust is something else Facebook will have to establish with Libra as so many other cryptos have left a bad taste in the mouths of consumers. Price volatility and federal regulators have put cryptos behind the 8-ball when it comes to really catching on and driving mass appeal.
But let’s not kid ourselves. One of the primary reasons for Facebook looking into this kind of a venture is because it is tapping out of other markets. It’s revenue streams are starting to plateau, which means it is time to find new ways to make money.
Something like Libra gives Facebook the potential to open other markets, such as retail, traditional financial transactions and even paying for public transportation.
It seems that Zuckerbecryptorg has found a new revenue stream that could cause trouble for traditional cryptos like Bitcoin.