If you’re a frequent Facebook user, you’ve probably heard all about “cryptocurrency” by now. Designed as an electronic, decentralized form of money, its legions of fans regularly promote it on social media — inviting everyone that they’re friends with to invest in it. The most popular cryptocurrency right now is Bitcoin, but you may have heard of other options like Etherium, Litecoin, and even the meme-inspired “Dogecoin.”
Cryptocurrencies are often touted as the most private, unobtrusive form of financial speculation. One new player to the field, however, has much higher ambitions for their platform. Facebook is introducing a cryptocurrency it’s named “Libra,” which is designed to be the go-to digital cash for shopping, investing and exchanging. It’s even backed by some of the biggest names in the financial industry — including Mastercard, Visa and Paypal.
Despite its lofty goals, Libra is looking to break on to the scene in a major way. But will its supporters and integration be enough to help it avoid the security stigmas that plague its parent company? Read on to learn why Facebook thinks you should start spending the cash that it’s printing.
Cryptocurrency: more than just Monopoly Money
To understand why Facebook’s massive Libra announcement is important, you’ll need to know why cryptocurrency is so popular in the first place. Invented by an anonymous software engineer calling himself Satoshi Nakamoto, Bitcoin emerged in the early 2010s as the preferred method of conducting business for programmers, hackers and internet black markets.
Designed to be truly “decentralized,” Bitcoin has no primary organizers or politics behind its value. Transactions are completely anonymous and use one-time transaction codes to keep exchanges confidential.
The Bitcoin itself is actually “mined” from complicated strings of code that require massive amounts of computer power to unearth. This scarcity is what gives the currency its value, but because of Bitcoin’s lack of regulation and management, prices can fluctuate wildly from one week to the next.
This factor is attractive to some investors but off-putting to most mainstream consumers.
In the wake of Bitcoin’s surge in popularity, numerous competing currencies have made their debut to varying degrees of success. Libra, Facebook’s horse in the race, is only the latest entry in the already crowded crypto marketplace.
What makes Libra different from Bitcoin?
Facebook’s reveal of Libra is actually a good deal more important than one would expect. Not only is it the first mainstream debut of a cryptocurrency, but it’s also setting itself apart with its supposed “centralization.”
Compared to Bitcoin, which has surges and crashes depending on the state of the market, Libra is backed by big-name investors like Visa, Mastercard, Uber and Paypal — as well as several other high-value assets. This means the exchange rates of Libra should be relatively stable compared to its earlier crypto-cousins.
Another notable aspect of Libra is Facebook’s planned implementation of the currency.
Soon, Facebook wants users to be able to use Libra for transactions on its own social networks — covering everything from purchasing apps, ordering food and even peer-to-peer cash exchanges. As of now, there’s no set release date for Libra, but Facebook plans to roll out more details on its new currency in the coming months.
Will Libra be as “secure” as Facebook’s other “products”
This is the primary concern among Facebook-skeptics, who are disillusioned with the platform’s penchant for being irresponsible with private user data. According to Facebook’s own Libra announcement, the company will not be using its product to improve ad targeting.
This is a major departure from how Facebook conducts much of its business, but it does leave open the idea of using customer data “to conduct research projects related to financial inclusion and economic opportunity with, for example, academic institutions and NGOs.”
It does emphasize, however, that any collected data would be “aggregated” from large swaths of users rather than individuals.
Keep in mind, just because Facebook isn’t using your data to train advertisements doesn’t mean that it isn’t collecting it.
Still, if you feel comfortable with Facebook knowing where you’re spending your money, how you’re spending it, and who you’re exchanging it with, this platform might be of interest. The company promises deep, sitewide integration for a variety of features — as well as ease of use and stable values thanks to its numerous backers.
Going by Facebook’s track record for data privacy and security, I’d personally recommend waiting and seeing how Libra performs before diving headfirst into its Crypto-world. Even if crypto is the money of the future, it still has some growing pains to go through before it achieves widespread use and recognition.