Will Libra Revolutionize E-Commerce?
by Tobias Giese
If you take a look at the latest tech news, there is one topic that cannot be missed: Facebook’s upcoming crypto coin, Libra. Together with its digital wallet, Calibra, it could disrupt the market of in-app purchases, just like WeChat did in China.
Facebooks acquisitions of WhatsApp and Instagram are taking on a whole new dimension under the banner of the Libra project. And don't forget that according to statista, Facebook's own messenger "is the leading social networking app in the United States, with over 2.3 million downloads in the Apple App Store." They also state that "Facebook ranked third in a ranking of leading apps accessed before shopping device sessions in the United States, and had an occurrence rate of 7.8 percent during online shopping device sessions as of December 2017, ranking even higher than Amazon or Google Search."
But what exactly is Libra?
Will Libra revolutionize E-Commerce?
Yes and no. One thing you can be sure of is that micro payments will become more and more convenient. Why? They are done quickly and seamlessly – and amongst the members of the Libra Association free of charge. If Facebook's plan was to succeed, we would have a stable cryptocurrency for the first time - which is the basis for companies to conduct secure business that is not subject to strong exchange rate fluctuations. A Libra coin is meant to be worth the same wherever you are, on a long time frame.
The possibilities are endless. From the consumer side: Buy a song on Spotify. Pay the auction you won on ebay. Tip your Uber. Grab a coffee. But there’s even more potential in it for small companies, when it comes to pay-per-use cases: everything measurable can be monetarized in small tokens: redeem coupons for lunch, the borrowed e-book, even likes and shares on your Facebook page. Unlike bitcoin, Libra will be able to perform well, handle transactions way faster. This will boost micro payments.
But a true revolution is not to be expected from the e-commerce sector, because paying online is already state of the art, at least in Europe, US and China.
The real revolution Libra is planning happens in Africa, where the Libra coin will be a stable and cheap access to financial services. The Libra White Paper states: “[…]large swaths of the world's population are still left behind — 1.7 billion adults globally remain outside of the financial system with no access to a traditional bank, even though one billion have a mobile phone and nearly half a billion have internet access.”
When Facebook rules the earth
Apparently there is a side effect. (One may argue, this is merely on the side, but the actual reason not to support the project) The lock-in effect of Facebook is getting stronger and stronger - a global social network with its own currency, with 2 billion users globally, dictating the rules. That is what Facebook as a company builds its value on: creating a global platform in which information is collected centrally. Even if, with the installation of Calibra as “totally separated digital wallet”, Facebook doesn’t have access to the details of all the payment transactions, Facebook will possess data of all the e-commerce transactions that were processed via Facebook, its Messenger, WhatsApp and Instagram. If you take into account that there will be (incentives and) users who – despite all criticism - connect Calibra and Facebook, new business models on the Facebook platform are possible. Facebook has already opened its messengers for companies and advertisement. If companies can now also sell products directly and customers pay with Libra, it´s not only the possibilities of personalized ads that will sky rocket.
Yet, in a time of intense public discourse over the potential break up of Amazon, Google, and Facebook given their market power, this currency launch somewhat sounds anachronistic.