Social media giant Facebook has announced the launch of its own cryptocurrency called Libra. The new global currency will be available as a stand-alone app, and will allow people to send and receive money, as well as purchase services and goods from Facebook and other partner platforms, through a purposely developed digital wallet called Calibra. While Facebook’s declared aim is to provide a monetary exchange platform for individuals who do not have access to traditional banking services, the launch of Libra is met with skepticism by many analysts who are concerned about users’ privacy. The Cambridge Analytica scandal has marred Facebook’s reputation, and there is little doubt about the fact that, through the combination of big data analytics and artificial intelligence, the social media giant will be able to accurately profile and map the users' purchasing patterns.
In May, members of the US Senate committee on banking, housing, and urban affairs wrote an official letter to Mark Zuckerberg, Facebook’s CEO, expressing their concerns about possible privacy violations. “It is important to understand how large social platforms make data available that can be used in ways that have big implications for consumers’ financial lives,” the letter stated. “It is also important to understand how large social platforms use financial data to profile and target consumers.”
In his address delivered during the Finance Malta 12th Annual Conference, Dr. Wayne Pisani, Grant Thornton Partner for Financial Services and head of the Fintech Team, had foreseen the disruptive effect that initiatives such as Libra might have on the world of finance. “Financial institutions should look beyond crypto and be less focussed on the FinTech or incumbent dichotomy, and watch out for competition from the tech and e-commerce giants like Google, Apple, Facebook, Amazon, and Alibaba since they have the power of aggregated communities; possibly a precursor to open banking and open data regimes”, said Dr Pisani.
Libra is administered by the Libra Association, a consortium of firms which includes Uber, Mastercard, PayPal, eBay and crypto exchange Coinbase. Each of these companies has contributed a minimum of 10 million US Dollars to the venture, giving the company more than 1 billion US Dollars to put towards the new currency. The new global currency, which runs on its proprietary blockchain technology, is tied to a mix of global assets to prevent the level of volatility common in the digital currency space. The use of its blockchain technology will also allow it to quickly scale to more users.