I was at a wedding last night (congrats, again, Kate + Rob) and a group of us started talking about Facebook, or, more specifically, how most of us have stopped using it all together. I deleted my account last year, but ended up having to create a ghost account with no friends just so that I could run social ads. But other than that, I don’t go on. This, of course, is a problem for Facebook. Here are some stats on its declining user base.
This trend line could be one of the motivating factors behind Libra (Facebook’s new blockchain-based currency). Payment infrastructure, if successful, should be a lot stickier than social infrastructure. But being the classic underachiever that he is, Zuckerberg’s ambitions run even deeper than this. Max Read published a fantastic article on Libra in New York Magazine last week. Here is an excerpt:
As far as I know, there’s only one other entity out there developing a blockchain-based digital currency for a billion-plus-member economy: China. The People’s Bank of China has been amassing blockchain and digital-currency patents as it develops its own cryptocurrency — loosely pegged to a basket of other currencies, just like Libra — which could help it more efficiently monitor and control capital flows. (So much for the decentralized, anarchist dream of cryptocurrency.) Facebook doesn’t want to compete with Mastercard, or even with Goldman Sachs. It wants to be the currency platform Mastercard operates on. Facebook’s payment product is a whole new currency because its long-term competition isn’t PayPal or Visa or even WeChat, but the renminbi, the euro, the yen, and the dollar.
Libra is expected to be first available to Indian WhatsApp users. The goal is to gain a foothold in the $689 billion global remittance economy, of which $80 billion flowed to India last year (2018). In the short-term, this probably won’t make any or much money for the company. But it should get people using and bought in to Libra in the medium-term.
If you’re looking for more on Libra, including what checks and balances can expected to be in place regarding your privacy and personal information, have a listen to this podcast: