How Facebook's crypto wallet Libra will change transactions as we know it

Facebook is breaking into the cryptocurrency space with its new digital wallet Libra powered by blockchain technology under Facebook's new subsidiary, Calibra. Expected to launch in 2020, Libra will be available in Messenger, WhatsApp and as a standalone app. Meanwhile, Calibra aims to provide financial services that will let people access and participate in the Libra network.

Consumers can send Libra to other individuals with a smartphone as one might send a text message and at a low to no cost, Facebook said on its website. It also intends to offer additional services for people and businesses, such as paying bills with the push of a button, buying a cup of coffee with the scan of a code or riding local public transport without needing to carry cash or a metro pass. Founder Mark Zuckerberg also said in a Facebook post that other companies will also build their own services using Libra, including Mastercard, PayPal, PayU, Stripe, Visa,Booking, eBay, Spotify and Uber.

According to Facebook, Calibra will have strong protections in place to keep consumers' money and information safe. Aside from limited cases, Calibra will not share account information or financial data with Facebook or any third party without customer consent.

This means Calibra customers’ account information and financial data will not be used to improve ad targeting on the Facebook family of products.

Facebook said that the limited cases where this data may be shared reflect its need to keep people safe, comply with the law and provide basic functionality to the people who use Calibra.

Calibra will also be using the same verification and anti-fraud processes that banks and credit cards use. Automated systems will also be in place to proactively monitor activity to detect and prevent fraudulent behavior. Dedicated live support will also be available to help if consumers lose their phone or password, or if their account has been hacked. Should Libra be lost as a result, consumers will also be refunded by Facebook.

In a statement to A+M, David Wachsman, CEO of blockchain PR agency Wachsman, who said that the initiative should serve as a platform for mass market adoption, mainstreaming the interest in cryptocurrency. He also said that this move is a "watershed moment" for the blockchain industry and for cryptocurrencies.

“Facebook and its subsidiaries, including WhatsApp and Instagram, presently count more than 2.3 billion monthly active users. Facebook’s platform advantage provides it with a potential distribution network completely unparalleled," he said.

Wachsman also expects more organisations to build Libra into their services, joining the list of companies including Visa, Mastercard and PayPal. "With this group’s backing, every individual business or even consumer transaction – booking a car, paying for a meal, listening to a song, or planning a trip – might soon be powered and enabled by digital currency," Wachsman added.

On the other hand, Ampersand Advisory’s CEO Sandeep Joseph said Facebook's planned entry into finance is "simultaneously exciting and scary". This is because Facebook has a history of grand announcements but are also getting "mired in" scandals and issues of privacy and ad targeting, among others, Joseph said.

"The newly launched Libra would possibly side-step the global financial regulatory framework. Hence, inviting scrutiny and oversight. But with Facebook’s growing clout in online advertising, and its hegemonistic power via WhatsApp, Instagram and Facebook, it would be foolhardy to underestimate Zuckerberg," he added.

According to Joseph, there are still plenty of privacy and financial laws at play, as well as risks, when it comes to the handling of users' information and ensuring they are not used for ad targeting on Facebook. "It definitely is an ambitious move, but the regulatory push back may be significant," he added.

Nonetheless, the banking and finance industry is "staring at disruption full frontal", Joseph said, should Facebook succeed in the payments space.

Changing the eCommerce game

Libra is a "strong indicator" on where technology is taking consumers and how they will evolve the modern day transaction, said Darren Yuen, group managing director, Reprise and BPN. He added that the positives from the launch of Libra will instantaneously be seen within the eCommerce space, and purchase patterns will no longer depend on the clock but on the users’ instantaneous desire and intention.

According to him, purchase intents and the fear of missing out among consumers have never been as closely intertwined as before. With today's consumers constantly wanting to make a purchase instantly, Yuen said brands will need to be present, not just in awareness and presence but in the ability to fulfill that purchase desire immediately.

eCommerce is the new reality, and brick and mortar retail stores will be show and demo outlets, with transactions being cashless, cashier-less and hassle-less.

He added that brands should get excited about trend and  start thinking about how they are re-inventing and re-imagining their interactions with customers in their digital journey.

Also weighing in on the conversation is Audrey Chong, chief investment officer at Magna, who said that Libra is a "natural progression" for the evolution of Facebook. According to her, the move is a "timely one" as Millennials are beginning to use other social media platforms to meet their needs.

"I really like how they have addressed security with blockchain at launch to allay any fear of fraud, and to build the trust elements. Barring the usual teething stage, I would expect Libra to skyrocket in adoption given Facebook’s massive reach globally," she added.

Meanwhile, Entropia's founder and senior partner Prashant Kumar told A+M that given the scale of Facebook's platforms, the launch of Calibra could bring about the inflexion point towards the mainstreaming of blockchain technology as a whole. According to him, the world revolves around two axis - connections and money.

With Facebook currently owning majority of the social media connections worldwide, Kumar said Calibra will allow Facebook to control financial services, trading and contract management, among others. He added that there is a possibility for the digital wallet to become the common underlying layers for Facebook, Instagram and WhatsApp.

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