From shaking up traditional finance sectors to empowering the unbanked, Facebook’s flagship cryptocurrency Libra has the potential to disrupt a number of sectors.
But will Libra do more harm than good?
This is the question tech entrepreneurs wrestled with at a panel hosted by blockchain consultancy DigitalX and Fintech Perth last night.
Held at the Blockchain Centre Perth, panellists said it was still unclear what impact Facebook’s Libra would actually have on the world.
The social media giant revealed more details for Libra last month with the release of its whitepaper.
Unlike tokens such as Bitcoin, Libra will be similar to a stablecoin – pegged to a basket of currencies.
Libra will also be permission-based and will initially be used to pay for things across Facebook’s existing infrastructure.
The Libra whitepaper cites a mission to “empower billions of people through the creation of a simple global currency,” however people are skeptical over Facebook’s motivations for creating its own currency.
Phil George, the founder and director of blockchain-based micro-investments platform Bamboo, said Facebook was following in the footsteps of WeChat and that finance was the next logical step for the platform.
“When Facebook announced Libra I thought of Apple, which previously announced they were entering financial markets and launching a credit card… Uber have their own credit card,” Mr George said.
“The point is that these companies are reaching critical mass in their own verticals, they’re all moving to finance.”
Fellow panellist Scott Waller, Oceania Assurance Blockchain leader at EY , said it was important to keep in mind that Facebook at its core was a commercial company.
“They have shareholders to answer to, they’re there to generate money… and they may end up doing good for the world as well,” said Mr Waller.
A force for good?
Globally, more than 1.7 billion people don’t have access to the services of a bank or financial organisation, yet two thirds of them own a mobile phone.
“Market penetration and the uptake of the platform in emerging countries is undeniable; $25 billion per year is spent on fees of migrant workers sending money to loved ones back home… that just seems wrong, so there are problems it (Libra) could solve,” said Mr Waller.
Power Ledger, which has developed a blockchain enabled energy trading platform, co-founder and chairman Dr Jemma Green said Facebook’s accessibility and user base lent itself to helping the unbanked.
“Financial inclusion is one of the sustainable development goals. If you wanted to use the member base of Facebook that is unbanked you could achieve that… it’s just a question of any perverse outcomes that could occur,” said Dr Green.
The Libra Association, an independent non-profit membership organisation made up of companies including Uber and Mastercard, will be tasked with governing the cryptocurrency, but the lines are still blurred when it comes to assessing data privacy and Facebook’s access.
“There’ll be a shedload of transactional and buying information linked to profiles of people that if it was used in the way Facebook uses advertising data streams, then I think people would have an issue with that,” said Mr Waller.
Facebook’s history with user data privacy hasn’t exactly been smooth sailing.
In 2018 Facebook made global headlines when it was exposed that Cambridge Analytica, a British political consulting firm, had harvested millions of users’ data without their consent, using it for political advertising purposes.
Despite this, Mr Waller said it seemed convenience was more important to users than data privacy.
“How many people turned off their Facebook account when the Cambridge Analytica thing happened? Probably less than one per cent of their user base,” said Mr Waller.
Dr Green said regulation would inhibit Libra’s adoption more than consumer appetite.
“There’s a big question mark around the extent it will get off the ground given the immediate reaction of the US government,” said Dr Green.
It may not be as simple as a simple thumbs up or thumbs down, but Libra’s announcement has certainly played a role in pushing blockchain and crypto to the forefront of mainstream media.
“It’s good news for all the real blockchain projects out there because it’s actually legitimising the industry and creating a narrative that this is something the largest companies in the world are doing,” said Dr Green.