28 Days of Libra, is a series of blog posts set to analyze the founding members of the Libra Association and how each will benefit from the creation of the Libra cryptocurrency. We will also look at what it means for consumers as well as what it means for small business owners in each respective industry. Today, we’ll take a look at the mastermind behind this moonshot idea, Facebook and it’s newly created subsidiary Calibra.
A Moonshot Idea
On June 18, 2019 Facebook and 27 other large companies, organizations and non-profits announced their involvement in Project Libra. This project was to be so bold and ambitious that there was and still is a high likelihood of it never seeing the light of day. This project was much more of an idea than anything else. An idea that would require the collaboration and coordination from hundreds if not thousands of the largest companies, organizations, central banks and governments from around the world. An idea that actually started 10 years prior on January 3rd, 2009 when the first cryptocurrency, Bitcoin was created.
A Giant Opportunity for Small Business
The idea was simple. To make access to financial resources a right for every man, woman and child on earth and not just a privilege for the fortunate. To allow value (ie currency) to move as simply as a text does, on a global, borderless and instantaneous scale. The creation of Libra, which is designed to be a price-stable cryptocurrency backed by a basket of fiat currencies like the USD, Yen and Euro, would revolutionize the global business landscape. Not only would it allow for the 1.7 billion unbanked people in the world access to basic financial resources but it would allow for completely new and exciting business models never before possible.
The Rise of Facebook
Facebook was famously founded by Mark Zuckerberg out of his college dorm room at Harvard in 2004. There have been many studies (even movies) conducted on the spectacular rise of Facebook. It was arguably the first company to tap into the explosive growth potential of social networks on the Internet. In the span of just 8 years between 2004 and 2012, Facebook exploding from 0 active users to over 1 billion people. Never before had a company seen such explosive growth in such a short period of time. It was the stuff of Silicon Valley dreams and it made early backers of the venture fabulously wealthy.
Today, Facebook is a publicly-traded company with a market cap north of $500 billion and an average of 2.41 billion MAU’s or monthly active users. It has since expanding into other product offerings including Whatsapp, Intstagram and Messenger and has cemented itself as one of the most influential companies in the world. When Facebook so much as sneezes, the world stops and takes note. When Facebook announces the development of a new global cryptocurrency, in partnership with 27 other multinational organizations (soon to be 100), we start to realize that the worlds’ foundation is shifting beneath our very feet.
A Less-than-Warm Welcome
The announcement of libra has been met with less-than-fanfare from most politicians and governments around the world. The creation of a currency had typically been a right reserved for governments and central banks, so when the worlds largest social network (with a not-so-great track record of late) announced the development of a new digital currency, politicians and governments took it like a slap to the face.
What the libra announcement did do was serve as a giant wake up call to every government on earth. Something that Bitcoin had been shouting for 10 years, and that was that innovation moves every industry forward regardless of whether one accepts it or not. Currencies were no longer excluded from the realm of innovation.
As a technological invention, Bitcoin showed the world that a natively-digital currency could exist, controlled by the many rather than the few. Before libra, Bitcoin and other cryptocurrencies were looked at as a sort of sideshow. An interesting “thing” on the Internet that didn’t really fit into existing categories and operated as a sort of alternative to the existing financial system. The libra announcement showed the world that these two worlds were heading on a collision course and a completely new financial system, one that was more inclusive and readily available to all, would emerge. Every government and central bank began to realize that the days of having complete and total control over the issuance of currencies was ending and that a freemarket for exchanging value over the Internet had begun. Bitcoin had released the genie and there was no way of getting it back in the bottle.
The Start of a Financial Revolution?
Though there are certain revolutionary qualities when one thinks of libra, there is nothing to be fearful of. Libra, when it launches, will be fully-backed by a basket of the most tried-and-tested fiat currencies in the world like the USD, Yen, Euro and Pound and be controlled by at least 100 of the most well-respected companies and organizations around the world. Visa & Mastercard have already signed up as members, so if you can trust the plastic sitting in your wallet, you’ll also be able to trust Libra.
A Long Road to Go…
Facebook knows that it’s made mistakes in recent years. Seemingly riddled by scandal after scandal for the past couple years, Facebook has made headlines for more of the wrong reasons than the right ones. It has its work cut out for it with this massive undertaking, but we believe their doing it for the right reasons. They’ve shown many indications that they’d work with financial regulators and governments in every corner of the world and will not launch the currency without the proper financial and regulatory approvals. They’ve open-sourced the idea so that anybody could contribute code meaningful to the project. They’ve convinced 28 of the most well-respected companies and organizations in the world to help lead the project. They’ve even established a subsidiary by the name of Calibra, seperate from Facebook to handle the digital wallet/ financial matters of libra.
The Big Picture
Without a doubt, this will be the biggest financial undertaking in our lifetimes. For the first time in our existence we have the chance to make access to financial resources a fundamental HUMAN RIGHT. A chance to create a currency that works for everyone, regardless of where you were born in the world. A chance to create a better money. By all measures it looks like Facebook is ready to play ball in making this dream a reality, the only question is will governments, central banks, and financial regulators be willing to join them?
This article is part one of a two part series on Facebook and Calibra. After the 28 Days of Libra blog series we will come back and give a deeper analysis of what libra means for Facebook’s business, Calibra’s business and the 60 million+ businesses with pages on the platform.
28 Days of Libra, is a series of blog posts set to analyze the founding organizations of the Libra Association and how each will benefit from the creation of the Libra cryptocurrency. We aim to discuss not just the new business models available for these companies, but the potential Libra has to reshape each respective industry and lead to new opportunities for all business.