by Daniel A. Bujorean
You all heard the news, Facebook is going into cryptocurrency, or more exactly the digital wallet. Well, this is not actually the case. Facebook is looking to do something else at a level that seriously shakes the financial world.
Announcing its Libra crypto and Calibra digital wallet, Facebook clearly stated that it wanted to reach unbanked consumers, as in adults who do not own bank accounts and avoid using banks in any other capacity, and give them access to financial services. This is quite interesting because it actually reveals the scope of the digital wallet and the Company’s plans for the future.
So, how they do it?
‘Facebook intends to make Calibra available through a specially created app and via its WhatsApp and Messenger platforms. Facebook’s global stablecoin will be backed by a reserve of assets to help protect it against the volatility often seen with other cryptocurrencies. Mastercard, PayPal and Visa are among the founding members of the governing Libra Association’, according to Finance.yahoo.com
Ok, let’s explain!
What is actually doing is reaching an entire new captive public, available on their platform, that does not have access to traditional banking and is offering just that.
Looking back in at the financial history, we know that the very first bank in the world was just an exchange bank for commercial class, Libra’s begginings are similar. The Libra ‘currency’ is founded on a real life currency or assets, as they call it, so it is not a currency but an exchange house and, also, a bank because it receives deposits in different world currencies.
It appears that Facebook’s Calibra Digital Wallet is not a crypto, it is actually a Bank, and this freaks out the world financial establishment.
Surely, now they call it a currency but this will become to look more like a fractional bank structure founded as any other bank on: deposits, reserves (passive assets) and credits (active assets). The last part is not here yet but will become real soon enough. There are already fintechs that use Facebook profiles to asses people’s bankability for loans, and Facebook will do just that. They will have access to all the users’ transactional history and will offer to credit them for a fee.
It appears that Facebook’s Calibra Digital Wallet is not a crypto, but actually a Bank, which freaks out the world financial establishment and quite rightly so: there are 2.38 billion (monthly active users) reasons to be afraid.