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/is a high likelihood of it never seeing the light of day. This project is much more of an idea than anything else. An idea that would require the collaboration and coordination from 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.
Financial Access = A right
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 Greatest Technological Innovation in Our Lifetimes
The technological invention of Bitcoin showed the world that it was possible to create a scarce, digital currency controlled by computer code instead of human operators. A way to transfer value on a near instantaneous and global-scale without having to rely on third-party intermediaries to do it. An internet currency that operated on simple computer code, mathematics and cryptographic principles.
Bitcoin may go down as one of the greatest technological inventions of our lifetimes, but as a currency it remains highly volatile and most likely will remain this way in the immediate future. Though bitcoins’ value prop as a completely decentralized and borderless store-of-value will remain intact for many years to come, in the near-term people and businesses looking to leverage the game-changing potential of cryptocurrencies need price-stability. The sort of price-stability that fiat currencies like the US dollar or the Japanese Yen offer us, but in a new and improved format that allows for value to move on the Internet like information does. A format that allows individuals to meet all their financial needs with a simple internet connection and cheap smartphone. This is what the Libra Association hopes to achieve.
The Libra Association: Founding Members
The founding members of the Libra Association include some of the largest companies and organizations in the world. Companies like Facebook, Uber, Spotify, Mastercard and Visa have already announced their support for the project, as well as global non-profits like Kiva, Mercy Corps & Women’s World Banking. By the time Libra launches, which is slated to be in the first half of 2020 (if ever), there will be at least 100 members governing the Libra cryptocurrency. If/ when Libra launches, you can rest assured that the global business landscape will be a very different place than it does today.
The Benefits of Cryptocurrencies
Cryptocurrencies, especially price-stable digital assets like Libra will be, are set to revolutionize the global business landscape and benefit the small business owner as much as the creation of the Internet itself has. Among the benefits to integrating cryptocurrencies into your business include:
Reduce online transaction fees
- The average credit card processing fee typically costs merchants between 1.5% and 2.9%. Price-stable cryptocurrencies, aka stablecoins like Libra, allow for merchants to cut those fees down to under 1%.
- No risk of chargebacks. Once a transaction is included on the blockchain, the underlying asset achieves absolute settlement in the merchants wallet
Expansion of addressable market-size
- 1.7 billion people remain without access to basic financial services and can’t take part in the global Internet economy. Two-thirds of these individuals have access to a mobile smartphone. Cryptocurrencies, like Libra, will serve as a way to include these unbanked individuals in the global economy.
- As the Internet plays an ever-increasingly important role in our business and personal lives, it’s vital that small business owners establish an online presence. The Internet as we know it allowed for information to be spread and shared on a global, instantaneous scale. Blockchain technology allows for value to move in much the same manner. Bitcoin was/ is the first financial instrument created using this new technology, but it most certainly will not be the last. It’s important for businesses to establish a footprint in this new and budding ecosystem.
Lean Business Models
- Eliminates financial bottlenecks in the global economy and allows for new business models that better utilize JIT production
Velocity of Money
- Money has changed form hundreds if not thousands of times during humanities existence here on earth, but the one constant has been that with every new financial innovation the velocity of money has increased. In other words, how easily one can transact with another person. Bitcoin gave us the technology to be able to transact peer-to-peer with every single person (or machine) on earth
- Innefficiencies in the legacy financial system don’t allow for microtransactions, or transactions of a hundredth or a thousandth of a penny. Blockchain technology serves as a more efficient system that allows for microfinance-focused business models
Internet of Things
- By 2025, it is projected that there will be 21.5 billion Internet-connected devices. Smart contract technology and cryptocurrencies will enable these IoT devices to self-operate on a financial level. This will enable improved efficiencies in the system and allow for governments and businesses to focus on developing services and products that really matter to consumers.
These are but a few of the many use-cases already being developed in the crypto-economy. The only thing missing is a universally-accepted, price-stable cryptocurrency for businesses to build this future on. We just might find that missing piece in Libra.
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.
If you’d like to stay updated on new developments on Libra, please subscribe to our free daily newsletter. Tomorrow we’ll be discussing the company behind this ambitious idea. A company with 2.4 billion users, and we’ll give you a hint, it’s not MySpace.