Some are calling it dangerous and some are betting cryptocurrency’s mainstream adoption grandkids on it – it is actually hard to get a view under a candle-light, especially when it is has got to do with Facebook
One bulb switched on somewhere. It is not a dark restaurant anymore, at least. Yes, the idea is fleshing out and this week’s announcement from Facebook is revealing the imminent global cryptocurrency launch in slightly larger pixels than before.
What we know now helps us understand the concept better, but, umm, it also helps us fear it more?
Hi-Hello-out of the way
Newly-announced details on plans for Calibra, a newly formed Facebook subsidiary, show that its goal is to provide financial services and hence, expand global financial inclusion. The digital wallet Libra, a new global currency powered by blockchain technology, when available in Messenger, WhatsApp and as a standalone app – sometime around 2020, will apparently make it easier for users to pay bills, split coffee rounds with peers, access public transport and have a Facebook-led cryptocurrency on their disposal for easy, swift and friction-less money activities – as it appears presently.
What is also clearer now is that it would be more of stable coin and not an actually mined-crypto currency, since its value would possibly be tied to hard assets like the U.S. dollar and the Euro. Its scope is also turning out to be as big as Facebook, with partnerships in place with 28 organisations – imagine the likes of Visa, Mastercard, PayU and Uber — and plans to rope in as many as 100 members by the time of the launch in the first half of 2020.
Lovely! Now we will have a well-established and omnipresent platform like Facebook to drive cryptocurrency usage. Now it would be easier to use money.
That’s the first draft of perfume that catches the nose as you sit across the blind date. But soon you are left twiddling with the napkins and questions that did not catch your eye before.
What -You like cats!!
Yes, industry experts and analysts are already pouring out words like ‘the most invasive data use’ or ‘dangerous surveillance’ or ‘financial colonization’ or ‘a new form of consumer debt explosion’ or ‘a sketchy new global federal reserve on the Internet’.
Are these concerns well –grounded?
Let us pick the ones that have Facebook has tried to pre-empt for now. As to possibilities of abusing data for ad targeting or security mishaps, Facebook has said that – “Calibra will have strong protections in place to keep your money and your information safe. We’ll be using all the same verification and anti-fraud processes that banks and credit cards use, and we’ll have automated systems that will proactively monitor activity to detect and prevent fraudulent behaviour. ….Aside from limited cases, Calibra will not share account information or financial data with Facebook or any third party without customer consent.
But why is Facebook doing this for free if not for the data? How different is it from a Venmo if people have to transfer fiat money first?
Is it really decentralized as a cryptocurrency should be? Would it be a good idea to let people now also buy things under peer pressure without their logical wits about them and create a financial déjà vu to what we have seen with Fake News explosions?
Those ifs-and-buts still hang in the air like an elusive whiff.
More so when we have surveys leaving a bad odour on the trust factor. A recent poll by MagnifyMoney has shown that among those who currently access accounts online, about a quarter of respondents were considering no longer accessing their bank and financial accounts with mobile apps or via the Internet.
And as per a December 2018 HuffPost, YouGov survey, among the main reasons that made a user stop using Facebook/use Facebook less; ‘I don’t trust Facebook’ popped high for 52 per cent users, with 34 per cent in the 18-29 age bracket feeling so, and 47 per cent in the 30-44 age group showing a similar direction. Some 36 per cent even indicated there is too much advertising on Facebook.
So is Facebook really aiming at the problem of ‘approximately 70 per cent of small businesses in developing countries lacking access to credit with $25 billion lost by migrants every year through remittance fees’ as it explained in the announcement? Or are we vulnerable to more security and financial-heartbreaks in this new space?
Wait till the third date
Able Joseph, Founder and CEO of Aisle, a dating app for meaningful relationships in a world cluttered with hook-up apps, has a refreshing take on these doubts – “I see it as a worldwide implementation of something like a Paytm or Venmo. People are smart. Security and privacy problems can happen on any platform that is available now. We have to decide what we want as global citizens. We have choices – permissionless cryptocurrency, a gateway of sorts etc.” He reasons that we really do not have to panic too much now because the adoption of cryptocurrency is low. “We can hope that such ideas like that of Facebook might be the stepping stones we need to get to widespread adoption.”
Turn to another dating app chieftain, and Snehil Khanor from dating app TrulyMadly hopes for more clarity before such currencies can be a normal part of the virtual world. “It is amazing for Paypal or Facebook to show interest in new technology paradigms. Blockchain is still not adopted in the mass segment so the usage angle remains vague. By 2030, we can expect a real explosion of blockchain and till then it will take time to evolve. Crypto-money inside social platforms will happen for sure but this is an idea that will take time.” He, however, puts the spotlight on the regulatory angle. Another factor to reckon, he adds, is how decentralized would the Facebook currency actually be.
Virtual currencies will gain prominence sooner or later but the entry and exit parts have to be figured out well, feels Tajinder Bagga, Founder CEO, Banter, an emerging social app. “On the face of it, it looks easy and simple, but that is not how it works. To gain any such virtual currency, a user will have to deposit something. These entry points are challenges on aspects of ease, speed and regulatory approvals. But if what Facebook proposes actually takes off, we might be able to get into that direction. The ‘how’ is an important question here.”
These are not newly-minted concerns or challenges. We already have the likes of Steem (a Proof-of-Brain (POB) algorithm requiring users to create content for mining coins), Reddcoin (a peer-to-peer (P2P) payment system that used velocity and coin as proof systems), Kin and Mithril etc. as decentralized social media platforms which have already been around trying to crack the match between cryptocurrency and social media. It is not easy to play cupid here – that is for sure.
As to how well and soon Libra does that, is still a conversation that will need patience until the dessert arrives. No instant swipe-right here. More like ‘all thumbs’ for now.