Viewpoint: No, Facebook’s Libra Will Not Really Help The Unbanked
By Daniel Döderlein
Just this past week, Facebook announced what we have heard rumours about for a very long time. Libra, the latest cryptocurrency is a “digital asset designed to work as a medium of exchange that uses strong cryptocurrency to secure financial transactions, control the creation of additional units and verify the transfer of assets.” Facebook unveiled its newest concept in a lengthy whitepaper, claiming Libra will “transform the global economy” and empower the global unbanked community—roughly 1.7 billion global citizens without a bank account. But will it really?
First, let’s see how Libra is meant to work. Libra is a form of digital money that is backed by a reserve of assets. When it launches in 2020, anyone will be able to use Libra as payment for online and offline products and services. At the start, Libra will be used to transfer money between individuals in developing countries who lack access to traditional banks. Ultimately, the aim of Libra is to be a truly mainstream cryptocurrency: a decentralized global form of payment that is as stable as the dollar, can be used to buy almost anything, and can support an entire range of financial products—from banking to loans to credit.
Photo courtesy of Mandy.