Facebook’s Libra Cryptocurrency Betrays the Company’s True Ambitions

Facebook’s Libra Cryptocurrency Betrays the Company’s True Ambitions, by Francois Mori.

Libra is meant to become the in-house currency for Facebook, Instagram, and WhatsApp’s combined 2.7 billion users. …

So let’s imagine that Libra does get off the ground. What’s its biggest competition? Hint: it’s not Bitcoin. Let’s start with the dollar — arguably the most powerful currency in the world. About 350 million people use the dollar around the world. That’s a little under 13 percent of Facebook’s claimed 2.7 billion users (across all three platforms), so even accounting for duplicates, fake accounts, and rounding errors, Libra could be used by more people — if not actual amount spent — than the dollar, and without a whole lot of sweat from Facebook.

Not buying it? Here’s an example of anemic adoption on Facebook. The company introduced Stories on Facebook in January 2017, and the feature was derided as a direct Snapchat ripoff that was so poorly implemented and confusing as to be laughable. By fall of 2018, over 300 million people were using Stories. Boom. Dollar.

The likelihood of Libra’s adoption is even higher because the company’s fastest growth is international, and Libra is likely to be the most useful in countries where the local currency is hyperinflated or banking is unreliable. Think of the 170 million Facebook users in Africa, many of whom already bank and transact on mobile phones. It’s an easy sell.

And if Libra starts big, the network effects of the Facebook platform will ensure that it just keeps getting bigger.

Then what? …

Over time, it’ll end up being easier to pay for things with Libra than with any other method. It might become trivially easy to exchange Libra for other currencies, if people even need to. It’ll remove barriers to sending remittances to other countries or international payments of almost any type.

Facebook will profit handsomely, of course, as will its big corporate partner-investors, like Visa, Mastercard, PayPal, Spotify, and Uber. They’ll end up in the unexpected position of being corporate central bankers, of a sort. And most significantly, the bulk of Libra users will be in what is essentially a closed network under the complete control of one CEO-slash-“emperor for life.”

At that point, there’s every possibility that Google or Amazon or even Apple will decide they need competing currencies for their private ecosystems (all three have rolled out some kind of payment options, if not their own fiat currencies, and there’s been speculation for at least a year that Amazon could launch a cryptocurrency). …

You can see why bankers and government officials have the big-time jitters. These are government-level ambitions, by any measure. …

So let’s recap: Facebook has a massive stateless citizenry; a small, hand-picked ruling body; rapidly expanding infrastructure; and now, adoption willing, a unified currency. …

This guy is still right on plan for global domination.