Facebook’s entry into crypto-currencies with Libra is a shot across the bow for banks. Over time you will be the winner with lower transactions fees or friction, but will it gain traction?
At the heart of Libra is trust. Do you trust Facebook? Do you trust Facebook to take care of your personal financial information?
What’s different about Libra compared to Bitcoin for example is that you still need to have trust.
Facebook will use blockchain technology to track your exchange of dollars, euros, or yen, for example, into Libra. But the ledger will be private. It will be controlled by Facebook.
With Bitcoin, the blockchain ledger is public. You can look up your transactions at any time. You don’t need “trust” with Bitcoin’s public ledger.
You absolutely need “trust” with Facebook’s Libra.
Libra is more of an online credit card like PayPal. You’re still operating in tokenized-fiat currencies. You still have the risks associated with them. But if it gains widespread acceptance and Facebook proves it’s trustworthy, the winner will be you the consumer as transaction costs plummet.
