Since its launch in 2004, Facebook has managed to connect more people than any previous media could in recorded history. This unprecedented rise has made Facebook not only a social media powerhouse but also a marketing and data juggernaut. This has obviously given the platform immense power to add to its elaborate financial war chest.
In this regard, Facebook has been a tremendous success, surpassing the expectations of many in the tech industry. With over 2 Billion users, this innovation has truly come full circle as the dominant social media of our time. Regardless, this amount of power has put Facebook in regulatory crosshairs of late.
The subsequent issues like data privacy breaches have taken Facebook from an industry darling to an all-powerful controversial entity. This, especially after the 2017 election of Donald Trump, where Facebook was the medium for spreading information which was often false, has made Facebook the subject of intense scrutiny.
In terms of crypto, Facebook has also had a controversial role in advertising. The supposedly neutral platform has often had bans on crypto ads. Indeed, Facebook now has its own crypto and this brings questions of vested conflict of interest to the fore. The banning and ‘unbanning’ of crypto ads in recent times mean that Facebook is going for the kill with the Libra coin.
The Libra coin is definitely one of the most consequential developments in the timeline of cryptocurrency. This is because it represents an unprecedented mainstream institutional investment into crypto. Indeed, many have been quick to highlight the potential for widespread adoption of blockchain technology.
This obviously will be a good thing for the innovation, which has quickly taken a life of its own. Libra coin will become a blockchain payments solution for users of WhatsApp and other Facebook platforms. As expected, news of this coin’s launch has brought a great deal of interest in cryptocurrency as a whole with Bitcoin experiencing a simultaneous price increase.
That said, a few details of this project are noteworthy. The Libra foundation is a new organization that Facebook has set up to manage the roll out of the coin. This organization has its headquarters in Switzerland which just happens to be home to other significant entities in centralized finance.
Switzerland is famous for its secrecy laws that have made the world’s elite stash their money there. This kind of non-disclosure requirements could be what informed choice of location. What most cynics point to though is the companies participating in the Libra project. Notably, Facebook has placed a $10million price tag for anyone wishing to host nodes for the Libra network. This has obviously locked out most crypto investors.
As a matter of fact, the companies which will host nodes include EBay, Mastercard, Stripe, Paypal and other gatekeepers of the finance and tech establishment to the table. More than 30 in all, the companies will continue to congregate around the project moving forward.
Impact of Libra
This coin is certainly very consequential to the crypto industry. This is because it has the potential to immensely disrupt the remittance sector in particular. In fact, some analysts have contended that it could replace the SWIFT monopoly on international payments. This means that coins like XRP which tried to carve a niche in this sector may be pushed into oblivion.
In the grand scheme of things, this can offer Facebook a chance to rebrand its public innovation. By coming in as some sort of savior for crypto, the tech giant has positioned itself to amass even more power. This is concerning because the entire premise for crypto was decentralization of financial power.
Facebook has not displayed the requisite willingness to be transparent and to protect customer data fully. This is why the S&P Dow Jones Indices is removing Facebook from its S&P 500 ESG Index, which tracks companies that score well in its environmental, social, and corporate governance rankings. S&P’s global head of ESG, explained the move as follows:
“The specific issues resulting in these scores had to do with various privacy concerns, including a lack of transparency as to why Facebook collects and shares certain user information,”
Facebook will obviously profit enormously from Libra, which will probably turn out to be really efficient. However, the question everyone needs to ask is, at what cost to users.
Mark Zuckerberg has never been the loudest champion of data privacy and the larger this company gets, the more flagrant violations have become. This is something crypto and tech enthusiasts alike must have in mind when dealing with Libra.