Yesterday, Facebook launched its own global currency called Libra. It is built on blockchain and it carries Facebook ambitious bet to redefine how money works in the internet (you can see it in this video). Theres lot of interesting aspects of Libra, from its underlying technology, the management model and privacey features. TechCrunch explain it beautifully in this 4000 words explainer.
My key takeaways from Facebook Libra are these :
- Libra is crypto-based digital currency. It is a cryptocurrency hence decentralized, open and secure. However, unlike other cryptocurrency, it is blazingly fast (1000 TPS compared to 7 in Bitcoin and 15 in Ethereum) and financially stable due to the backings of real-money reserve. To use Libra, you will need Calibra, its digital wallet. You can cash-in, store, send and cash-out in Calibra similar to Paypal, Gopay, OVO and other digital wallet. However, Calibra will seamlessly handle multi-currency remittance, available around the world and integrated with FB Messenger and Whatsapp. Calibra itself is built by Facebook however since Libra is open infrastructure, in the future other companies might built other wallet apart from it.
- Libra is mainly targeting unbanked population. In the intro video, Libra is designed to be fast in Lagos, simple in Manila and convenient to send money to Mexico City. To use Libra and Calibra, user only need feature phone, internet and any kind of government-issued identification. It doesnt require smartphone hence highly inclusive. Libra also claimed to utilize blockchain to drasticly reduce fees.
- Libra is backed by lots of prominent organization. Apart from Facebook, Libra is supported by giants and whales of global institution. Visa, Mastercard, Paypal, Stripe are onboard. Theres also telco (Vodafone), venture capital (Andreesen-Horowits) and non-profits (Kiva and Mercy Corps). Full list of Libra backers can be read here.
This is an interesting slash scary things for fintech and crypto development going forward. If you work in wallet or digital money business, Facebook is eye-balling your lunch. Every penny that went into Calibra wallet is a penny less from other wallet. If youre in fintech focusing on unbanked, like me, this could be potential to do cashless financial service delivery. If you work in blockchain, Libra could be the key use case to bring the crypto to the masses. Global bitcoin users currently is 35 millions while Facebook itself has 2.3 billion userbase.
So considering this development, what can we do to anticipate? heres my initial thoughts :
Selling things online ? Learn how to use Libra / Calibra
Libra / Calibra is backed by Facebook. It will be integrated with FB Messenger, Whatsapp and probably on Instagram as well. Even on a less-than-best case of not disrupting digital money, Libra might still be a payment method accesible to billions of internet users. If youre in the business of selling stuff online, you might need to take closer look. Observe whether Libra / Calibra could bring more business to your store.
If youre a developer, technical explanation on how to do transaction in Libra can be read here.
This could get big in Indonesian specific context as well. Facebook is the first contact to the internet for majority of Indonesians. Before e-commerce marketplace like Bukalapak and Tokopedia became unicorns, Indonesian netizens buy and sell things mainly on Facebook pages, Instagram comment section and Whatsapp groups. Imagine if there is a way to do that transaction seamlessly across social media.
Fortunately (0r unfortunately), Libra / Calibra development will focus on peer-to-peer transfer first. Merchant payment and other integrations will be developed later. Plenty of times to strategize.
Cash-in and Cash-out (CICO) Hurdles
All the best features in the world means jack shit if there are no easy way for user to add and redeem Libra balances. In the West developed nations and China, this might be less problematic due to most people have money in bank or fintech accounts. Libra / Calibra would only need to integrate with financial companies. But in countries with low financial inclusions, the ones Libra aim to capture, they need to be available in existing intersections where hard cash converted into some kind of balance.
In Indonesia, this could means being available in cornerstore such as Indomaret / Alfamart which has around 30 thousands spot nationwide. Telco sellers can also be good CICO points. Telkomsel alone has 400 thousands registered sellers but since they have their own wallet, LinkAja, slim chance to collaborate. Hence, would be good move to approach XL and Indosat as the next options leveraging their connection with Vodafone.
CICO availability in my opinion will be good indicator whether Libra make or break in this country.
Blockhain Skills Might Get Hot
Like i mention before, due to Facebook and other backers. Libra could be a potential blockbuster use case for blockchain. Companies which are aiming to benefit from OR in a threat of getting razed would be wise to get to know Libra under the hood. This means getting and developing blockchain capabilities in the organization.
If you are a developers and working in financial services, its a good time to arm yourself with blockchain 101. If Libra succesfully getting into global disruption, demand will skyrocket.
Libra have its own programming language called Move which enable developers to build custom transactions and smart contracts.
Apart from the fanfare, one should also look Libra with healthy skepticism. There are major privacy issues regarding Facebook which could spiral deeper if they handle financial data. Libra being global wallet will also bring major attentions from finance regulators around the world.
Libra / Calibra is currently in testing mode and will be publicly available in early 2020. So will this be an upcoming revolution or countdown to extinction? Well see in 6 months.