Should retailers welcome Facebook’s virtual currency?
Facebook on Tuesday confirmed that it would lead an effort to create a new global digital currency, called Libra, powered by blockchain technology.
Expected to make its public launch in 2020, Libra will function as a “stablecoin,” meaning it will have a stable price backed by a number of different global currencies like the dollar or euro in order to limit the volatility typically associated with cryptocurrencies like Bitcoin.
The digital token is being billed as a way to help the 1.7 billion individuals, largely in developing countries, who have limited access to traditional banks. Many observers believe, however, that the bigger goal is the creation of a digital currency that becomes the go-to payment option for both online and offline, in addition to a way to send money to family members and friends.
A new Facebook-owned subsidiary, Calibra, will release a wallet for Libra tokens and ultimately other banking and finance products. The wallet will be integrated into Facebook Messenger and WhatsApp, but Calibra would not be allowed to share any of its financial customer data across Facebook’s platforms.
Facebook further created Libra Association, an independently managed, non-profit membership organization that consists of 28 companies, including Uber, Spotify, Mastercard, Vodafone, Visa and PayPal. Each partner is expected to invest at least $10 million in the entity.
Several tech bloggers said the technical explanations around Libra are dense, and many unknowns remain over its security. Critics already have concerns over Facebook potentially becoming a financial powerhouse given its social media clout and alleged privacy abuses.
Some have also speculated that Amazon is looking into building its own cryptocurrency.
In a column on Forbes.com, Nikki Baird, VP of retail innovation at Aptos and a RetailWire BrainTrust panelist, wrote that retailers need to pay attention to cryptocurrency developments because they have to be ready to take payment from consumers in whatever manner they want to pay. “If Facebook’s coin signals the launch of currencies across large platforms where retailers engage with consumers, the need to support cryptocurrency payments may get real for retail very fast,” wrote Ms. Baird.
- Libra Association and create a new currency called Libra – Facebook
- Introducing Libra: a simple global currency and financial infrastructure that can empower billions of people – Libra Association
- Libra White Paper – Libra Association
- Why PayPal Plans to be Part of the Libra Association – PayPal
- Facebook’s New Cryptocurrency, Libra, Gets Big Backers – The Wall Street Journal
- Facebook announces Libra cryptocurrency: All you need to know – TechCrunch
- Blockchain In Retail: 2019 Status Check – Forbes
- Amazon ‘Will Have to’ Create Its Own Crypto in Future, Binance CEO Says – Cointelegraph
- Facebook’s Libra Cryptocurrency: Everything We Know – PC Magazine
DISCUSSION QUESTIONS: Is it time for retailers to accept cryptocurrencies? How receptive should retailers be to accepting cryptocurrencies developed by companies such as Facebook or Amazon?