Brock Shinen
Digital Transformation Consultant

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How Facebook’s Currency Should Be a Wake Up Call

Facebook has formally announced their plans to build a cross-border payment system that utilizes a form of stable coin, cryptocurrency, and blockchain. A global currency called Libra, and the wallet that will empower it: Calibra.

Let there be no doubt you’re witnessing a day no less historical than 29th of June 2007 when the iPhone was launched by the legendary Steve Jobs. In one announcement,
a lot of people are now facing the inevitable demise of their business. It’s just natural.

When the car came, the horse and carriage industry suffered the hemorrhage. When the CD came out, the cassette and vinyl industry went under. MP3 and digital streaming killed the DVD industry.

This is indeed a very powerful announcement with an effect that won’t be understood until it is too late.

What It Means

By launching Libra, Facebook has essentially started on a journey, which would be very difficult to counter. Libra will have competition, regulatory challenges, and incumbents who don’t want to die so easy. It will be very interesting not only to witness it, but also be a part of it.

As Facebook is such a large platform, it provides an opportunity to easily find a partner in each territory who would happily be a payment partner for last mile distribution and account credit.

Facebook has learned a lot of lessons from FB credits, messenger payments, and by studying a host of other global payment providers and networks to build what they are envisioning, which is a worldwide payment coin.

The interoperability of the coin comes from the fact that it can be converted to fiat in almost any of the countries that Facebook would work with this project Libra.

PayPal is the only one-hit wonder that is truly available on a global scale, because they lucked out and grew with the internet as the internet and e-commerce itself was growing.

Many will say, they are already ready to partner up with Facebook to settle payments on their behalf in various countries that they have licenses and access to.

While it may be true in short run, Facebook will eventually seek settlement partners directly in each country. Notice the plural: partners. A money transfer operator is an intermediary and offers no long term benefit to association.

Banks do because that is where the money is parked. And the less people touching the money in-between when it is being transported, the better it is.

In today’s landscape, there is already a very well established network for banking and payments. On a person-to-person cross-border payments landscape, about 15,000 companies worldwide are operating in the $600+ billion market.

On the flip side, we have the the $100+ trillion B2B/B2C cross-border payments industry with less than a 1,000 players. Facebook will enter both markets. No one will say no to Facebook when offered partnerships.

If the FB coin becomes the de facto IOU, there is a lot of money to be made online. When you digitize money, its life is already has been defined in a finite sense.

Going forward, it will be very interesting to see how this all plays out.