Facebook announced Libra, its very own cryptocurrency powered by blockchain technology. It is also introducing Calibra, a digital wallet for Libra. The wallet will be available in Messenger, WhatsApp and as a standalone app. Facebook expects to launch these products in 2020.
For many people around the world, even basic financial services are still out of reach: almost half of the adults in the world don’t have an active bank account and those numbers are worse in developing countries and even worse for women. The cost of that exclusion is high – approximately 70% of small businesses in developing countries lack access to credit and $25 billion is lost by migrants every year through remittance fees.
I see a problem. People who don’t have bank accounts might not be able to afford a smartphone to access Calibra and the Libra cryptocurrency on. I suspect Facebook is aiming mostly at businesses and not-so-much on people who are poor.
Facebook says that Calibra will let you send Libra “to almost anyone with a smartphone, easily and instantly as you might send a message, and at low to no cost.” In time, Facebook hopes to offer additional services for people and businesses, such as paying bills with the push of a button, buying a cup of coffee with the scan of a code, or riding your local public transit without needing to carry cash or a metro pass.
According to Facebook, Calibra will use the same verification and anti-fraud processes that banks and credit cards use. There will be automated systems that proactively monitor activity to detect and prevent fraudulent behavior. If someone gains access to your account and you lose some Libra as a result, Facebook will offer you a refund.
What about privacy? Facebook says Calibra will not share account information or financial data with Facebook or any third party without consumer consent. Personally, I wonder exactly how that consent will be given. Will users have the choice to opt-in to giving consent? Or will Calibra require that consent before people can use it?
Facebook also says Calbra customers’ account information and financial data will not be used to improve ad targeting on the Facebook family of products. Given Facebook’s history, it would be wise to be skeptical of that claim.