Facebook after a long wait has revealed its plans for a cryptocurrency called Libra. It is a stable coin which uses a permitted network to carry out transactions. The project has turned out to be one of the worst-kept secrets in the history of virtual money. After months of news leaks and speculation, Facebook along with its 27 other partners are touting the Libra digital coin and Facebook’s corresponding digital wallet, Calibra, as a way to make sending payments around the world as easy as sending a photo.
What’s curious about the projects are the partners which include e-commerce giant eBay, ride-hailing App Uber and most curiously other payment processors like PayPal, Visa, MasterCard. This is a really odd situation given the fact that crypto could end up being the biggest challenge to these companies. Some have even dubbed this new technology to be a threat to the fundamental business model of such payment processors. So are these companies digging their own grave? A closer look reveals a different picture.
Given the dominant position of Visa, Mastercard, and PayPal, their decision to join the Libra Association makes no sense from an outsider perspective. But there are genuine reasons which could be behind the move. Joining the Libra Association gives them access to the network and an inside look into the payment system, this can give vital information necessary for changes to be adopted in their own native platforms. Also, all of these payment processors use a bank partner to do the final part of transfer the money to the accounts, and Libra can open up a new customer base of potentially 1.7 billion people with no bank access. Finally, if indeed crypto takes over the world, all of these companies that might end up being put out of business might want a piece of that pie. This is similar to many oil companies investing in renewable technology.
Facebook, Instagram, and Whatsapp with their huge user base can push the new projects into the hands of hundreds of millions of people, and in many instances, the project has real tangible benefits. But the fact remains that the payment methods which exist today are robust and reliable, handling trillions of dollars of transactions every year. It is convenient and people love it. It will be hard for crypto to dethrone the traditional player. Yet, payment processors are taking part in Libra Association just to be cautious and not be blinded by an upcoming competition.
Follow us on Twitter, Facebook, Steemit, and join our Telegram channel for the latest blockchain and cryptocurrency news
Instant Crypto Credit Lines™ from only 5.9% APR. Earn up to 8% interest per year on your Stablecoins, USD, EUR & GBP. $100 million custodial insurance.
Trading Bitcoin is too complicated?
We highly recommend our Crypto-Starter-Kit to you!
Follow us on Social Media and subscribe to our free crypto newsletter!
Diskutiere mit uns!
This post may contain promotional links that help us fund the site. When you click on the links, we receive a commission - but the prices do not change for you! :)
Disclaimer: The authors of this website may have invested in crypto currencies themselves. They are not financial advisors and only express their opinions. Anyone considering investing in crypto currencies should be well informed about these high-risk assets.
Trading with financial products, especially with CFDs involves a high level of risk and is therefore not suitable for security-conscious investors. CFDs are complex instruments and carry a high risk of losing money quickly through leverage. Be aware that most private Investors lose money, if they decide to trade CFDs. Any type of trading and speculation in financial products that can produce an unusually high return is also associated with increased risk to lose money. Note that past gains are no guarantee of positive results in the future.
You might also like
More from Blockchain Companies
The Swiss company Envion AG had the goal to mine cryptocurrencies such as Ether or Bitcoin with self-made mobile containers …
Crypto banks have been in the making for some time now, and it seems that the concept is finally taking …