This was an old challenge I posited in the fintech and banking domain:
In this videocast, I discuss the need to build a truly pan-African digital remittance/transfer banking product which is agnostic of location or currency in Africa. None of the products we have today meets that standard. Largely, I envisage a situation where all you need to buy and sell across Africa is one bank account in just one African Union country. With that, you do not have to even think about the specific currency of that account as technology will seamlessly make it possible to access other African markets for payments, transfer etc. The banks or fintech companies must still comply with all regulations related to inter-national transfers, forex etc. The only difference is that customers will not see them as they will be hidden with technology.
This week, I can write that Facebook Libra is getting close to making that a reality: “The mission for Libra is a simple global currency and financial infrastructure that empowers billions of people…Libra is designed to be a stable digital cryptocurrency that will be fully backed by a reserve of real assets — the Libra Reserve — and supported by a competitive network of exchanges buying and selling Libra”. That is fortunate and unfortunate at the same time: Facebook owns African payment while also helping to solve a major friction on intra-African trade and commerce. This is Facebook Libra, a blockchain-based cryptocurrency that will unify global payments. Through Libra, Facebook will have another company with at least a billion users and also create a new basis of competition for all fintech companies especially those in the developing world like Nigeria. Most remittance companies will struggle and disruption will be unbounded. Libra is the operating system of the new web! It is huge.
Facebook has finally revealed the details of its cryptocurrency, Libra, which will let you buy things or send money to people with nearly zero fees. You’ll pseudonymously buy or cash out your Libra online or at local exchange points like grocery stores, and spend it using interoperable third-party wallet apps or Facebook’s own Calibra wallet that will be built into WhatsApp, Messenger and its own app. Today Facebook released its white paper explaining Libra and its testnet for working out the kinks of its blockchain system before a public launch in the first half of 2020.
Facebook won’t fully control Libra, but instead get just a single vote in its governance like other founding members of the Libra Association, including Visa, Uber and Andreessen Horowitz, which have invested at least $10 million each into the project’s operations. The association will promote the open-sourced Libra Blockchain and developer platform with its own Move programming language, plus sign up businesses to accept Libra for payment and even give customers discounts or rewards.
Facebook is launching a subsidiary company also called Calibra that handles its crypto dealings and protects users’ privacy by never mingling your Libra payments with your Facebook data so it can’t be used for ad targeting. Your real identity won’t be tied to your publicly visible transactions. But Facebook/Calibra and other founding members of the Libra Association will earn interest on the money users cash in that is held in reserve to keep the value of Libra stable.
And from the Whitepaper – “This is the goal for Libra: A stable currency built on a secure and stable open-source blockchain, backed by a reserve of real assets, and governed by an independent association. Our hope is to create more access to better, cheaper, and open financial services — no matter who you are, where you live, what you do, or how much you have.”.
One of those problems with having single entity with so much power, it doesn’t really matter the euphemistic posturing out there, without Facebook’s access to unlimited data, this won’t be possible.
From the consumers viewpoints, everything looks great, but for entrepreneurs and economies of some countries, it could be chaos. Buying and selling occur when there are productive citizens, not a mere social media interactions.
Facebook formed an association, with American companies, while Africans are waiting to consume. The only thing I can consider an association is where at least a company from each country where Facebook is operational is a member of the association, so that in the sharing of the bounties, you are not completely cut off!
Just over four decades ago, about five corporations virtually ran the world, and we are essentially converging to the same scenario again. This world is rigged, and it’s becoming scary, because some countries don’t stand any chance of playing mainstream.
The same technologies we are celebrating today could be our greatest undoing, if we don’t apply brakes in some key places.
Sometimes those things we call frictions are necessary, because they help keep a lot more people busy!
If Facebook’s libra is allowed to go on, it will adversely affect the economies of emerging countries like Nigeria. Unlike other cryptos where no real value is attached, Libra is backed by USD asset. Here is how- For every libra purchased with USD, the dollar is transferred to the Libra councils account. This is invested in government short term securities, in other words, a vast amount of wealth will be informally transferred into the USA economy and will remain there until the owner decides to cash out to fiat cash. This isn’t good for emerging countries.
A User Comment under #2
Please note for clarification purpose, hashtagcryptocurrency is based on the following categories 1. payment/remitter 2. Exchange/ Asset 3. Utility Every hashtagcryptocurrency has where it is back with when value has been created depending on supply and demands. For specific used case, u can DM to gain more hashtagknowledge of how it works as a subject matter expert in that domain. Please note that emerging countries like Nigeria will not be adversely affected as the hashtagCBN can be a node which validates transaction and receives a Network fee for that. This will optimize transparency in our financial system.
The way i see it, facebook Libra coin is not competing with other coins such as Bitcoin or Ethereum But it’s competition will be from the traditional Banking system backed by the Government.
The coin will definitely face stiff battle and regulatory challenges which i believe will definitely happen. The Government backed Banks will not fold their hands and allow a currency pegged to the fiat currency and shielded from volatility unlike other coins to take over their transactions.
Facebook privacy issues are a concern and how much power will he wield with such great data on his hand on people’s spending habit, knowing what they buy, who they are buying from and all the details. It’s quite scary to think about.
Unlike other coins, Libra is not decentralized so Mark Zuckerberg snooping continues.. The regulatory war has just been declared.