Could Facebook's New Cryptocurrency Revolutionize Banking for Billions of People?

Published September 24th, 2019 - 11:39 GMT
Libra will be available to users in three platforms: WhatsApp, Facebook Messenger, and as an app on its own.
Libra will be available to users in three platforms: WhatsApp, Facebook Messenger, and as an app on its own. (Shutterstock)

The blockchain technology is slowly and steadily revolutionizing the worldwide banking sector, particularly via cryptocurrency. Most people see this new technology as the best alternative to the tedious, bureaucratic, and overly-regulated traditional banking systems. And as people across the world continue to appreciate the huge potential that cryptocurrency has, a major player has thrown its hat into the ring. That player is the social media giant, Facebook.

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Earlier this year, Facebook announced that they will be launching Libra- a digital currency that’s more or less similar to Bitcoin- by 2020. Once the platform rolls out fully, more than 2 billion Facebook users from all over the world will be able to make digital payments, among other financial transactions, fast and seamlessly over the internet. The entry of Facebook in the banking sector has been named by many financial experts as the biggest game-changer that the sector has seen yet.

Libra will be available to users in three platforms: WhatsApp, Facebook Messenger, and as an app on its own. Users on the three platforms will be able to pay for goods and services as well as transfer money in the form of the Libra digital currency rather than in their local currencies. According to a senior executive at Facebook, the system is aimed at helping the millions of smartphone users who don’t have bank accounts to make payments without needing to join the mainstream banking world.

Facebook will be partnering with seasoned online payment platforms such as eBay, PayPal, and MasterCard to bring Libra to life. Ridesharing startups Lyft and Uber are also part of the collaboration. However, the encrypting blockchain technology that supports Libra is entirely owned by the social media firm.

Will user data be safe? 

As revolutionary as digital currencies could be, there are some serious teething security and privacy issues that plague their worldwide adoption. Libra isn’t exempted from this unfortunate reality. On top of this, financial regulators in the US and UK aren’t convinced that Facebook has the infrastructure needed to succeed in the financial sector.

Notably, the US Senate is skeptical about Facebook’s ability to safeguard user privacy in the wake of the infamous Cambridge Analytica scandal. Clearly, Mark Zuckerberg, the Facebook CEO, and his team have their work cut out for them. They need to gain back the trust that people had in their systems before the reputation-damaging scandal hit the company in 2016.

Concerns over privacy and security

As Libra and cryptocurrency as a whole sort out their privacy and security concerns, end-users need to find secure ways of leveraging the obvious benefits that this technology brings. One proven way of safeguarding your financial information from a data breach is using a virtual private network (VPN).

A VPN allows you to browse the internet as if you were using a faraway server, allowing you to trade in cryptocurrency anonymously. In case you are geo-blocked from a certain website, a VPN will open the door and give you access. Take an example of a USA citizen who has been denied access to the main exchanges and crypto trading platforms as a result of draconian US trade regulations. Such a person can only trade successfully through a VPN.

Regrettably, cyber attackers have been plaguing digital payment systems by intercepting financial transactions and fleecing unsuspecting traders. With a VPN, however, your data is encrypted and extremely hard to intercept. You can enter your banking details to whichever cryptocurrency platform you wish to without minding about hackers laying their dirty hands on such vital information.

Besides hackers, a VPN will shield you from government surveillance so that even if your government is opposed to online cryptocurrency trading, you can continue with your business unnoticed.

The Crypto Payroll

Just like Bitcoin, Libra is expected to have a huge impact on the global banking system. For starters, it will expedite financial transactions, making it possible for users to finalize business deals in minutes. The frustrating long waits that traders are subjected to in mainstream banking will soon be a thing of the past.

Secondly, Facebook is accepted all over the world, meaning that Libra will be accepted globally as an international currency. Traders in the exports and imports business will be the greatest beneficiaries of this new development. Recruitment agencies, on the other hand, will have an easy time finding and paying employees over the blockchain technology. The expensive foreign transaction fees and exchange rates that multinational recruiters are forced to pay when hiring in China are also being eliminated gradually by this new technology.

Speaking of China, companies who have hired local Chinese workers are now able to pay their staff members via digital wallets, consequently bypassing the tedious legal paperwork that exists in the country’s mainstream banking.

A more efficient future

Paying or getting paid via cryptocurrency will become even more efficient with the introduction of Libra. Consequently, with centralized currencies becoming the new norm, businesses will be able to penetrate international markets with ease. If you are looking to leverage cryptocurrency payments and expand in Asia, please remember to hire a translation company to help you with the very critical delocalization process.

By Ariana Merill

The views and opinions expressed in this article are those of the author and do not necessarily reflect the views and opinions of Al Bawaba Business or its affiliates.

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