Facebook recently announced plans to release its own cryptocurrency, the Facebook Libra. The company is not launching alone however; they have the backing of a “few dozen” partner companies including Visa Inc., PayPal Holdings Inc., and Uber Technologies Inc. Each partner will invest about $10 million each.
The company headed by Mark Zuckerberg has a massive hold on the world’s population. Approximately one third of the world visits the site on a monthly basis, making it an extremely effective tool in reaching large amounts of consumers.
Facebook’s goal for Libra? To be the preferred bill payment, money transfer, and any other financial transaction method of its users.
Facebook’s challenge? Convincing its users that it’s trustworthy and to make the switch. While Facebook still has some trust among its users, some are skeptical due to its security issues in recent years. It may be challenging for Facebook to compete with countries’ central banks that issue hard currency considering its waning reputation in the public eye.
Facebook’s main draw for the Libra is the theory behind the currency’s value. The digital currency will be pegged to the value of a basket of fiat currencies, preventing it from large swings historically seen in bitcoin and other cryptocurrencies.
However, with innovation comes regulation. It is still a large question how this new currency will be regulated. Since the currency is pegged to already existing currencies, I feel that the Libra will be much more successful in countries that do not have such robust access to banks as we do in the United States.