Libra is the most ambitious and aggressive crypto effort we've seen to date — here's why:
and regulatory scrutiny. Given these challenges, Facebook's plan to disassociate the running of Libra from its core business is a good move — but whether users trust that it will be genuine in its intention is yet to be determined.to develop products for Libra. Dubbed Calibra, the new unit will develop a wallet that will enable Facebook Messenger and WhatsApp users to buy, hold, and transfer Libras.
Adoption of cryptos as a form of payment has been low so far, with Bitcoin functioning more like an investment asset. However, Libra has more than deep resources backing it: Facebook's huge user base gives it an unprecedented advantage over other crypto projects. The social media giant already counts 2.4 billion monthly active users, while attracting the likes of Uber and eBay gives Libra access to these platforms' user bases — a powerful combination that could ignite adoption.
And if users react positively to the crypto, it could upend financial services. For instance, the crypto could substantially disintermediate FIs that specialize in cross-border transfers: Facebook says $25 billion is lost by migrants each year on fees to companies like Western Union. By offering substantially cheaper alternatives to these established players, Libra can disintermediate incumbents and fintechs and reshape their role within the industry.
Although Facebook's user base may suggest Libra is already too big to fail, the social media giant's reputation is the elephant in the room. That Facebook has thus far failed to assuage concerns from both regulators and users around data privacy will continue to be a major hurdle it needs to overcome.
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