5 reasons why Facebook coin Libra is a game-changer

5 reasons why Facebook coin Libra is a game-changer

The dust has barely settled on Facebook's recently released Libra white paper and yet prognostications have already begun as to whether or not the much anticipated stablecoin will survive. There have been equal parts jubilation and hand-wringing as well.

Facebook's plans are an enigma. On the one hand, Facebook proposes nothing new in principle. But on the other, no company with the power and clout of Facebook has ever endeavored to go down this road before.

No matter where you stand on Libra and Facebook's other blockchain technologies, one thing is for sure: their decision to get into the cryptocurrency space is game-changing. What the company does with Libra over the next 12 to 18 months will define its position in the marketplace. It could very well define the future of cryptocurrency as well.

For those who are not sure what to make of Libra, here are five reasons it is nothing short of being a genuine game-changer:

1. It brings legitimacy to stablecoins

Libra is not a cryptocurrency in the same sense that Bitcoin, Litecoin, and Ethereum are. The coin itself will be back by a basket of fiat currencies, government securities, and so forth. As such, Libra is a stablecoin. This is important for a couple of reasons.

First, stablecoins have been hanging around the perimeter for a couple of years now. If cryptocurrency were a schoolyard, stablecoins would be the kids standing on the outside of the circle just hoping to be picked to play on a team. Some of them actually have something to contribute; others are wasted picks altogether.

The entire stablecoin concept has remained on the fringes because the crypto community really doesn't know what to do with it. Purists reject stablecoins altogether because they are backed by other proven assets. Those with no loyalties to the fundamental concepts of cryptocurrency also have no qualms about embracing stablecoins because, after all, they are just another alternative monetary system.

Issuing Libra as stablecoin was a brilliant move in that it keeps Facebook's coin tied to a more reliable economic system. Libra will not be subject to the same kinds of fluctuations we see in traditional cryptocurrencies. Its price and value will be more closely tied to the fiat currencies and securities that back it.

Second, that stability and backing adds legitimacy to the stablecoin concept. If Libra succeeds on a grand scale, and many people expect it will, such success will show the value of stablecoins as monetary systems. That will encourage more stablecoin projects and, quite possibly, fewer Bitcoin-like projects in the future.

2. It forces companies to make a decision

Many of the world's corporate giants have behaved a lot like stablecoins in recent years. They have dabbled in blockchain without ever committing to it. They have treated blockchain like a shiny new toy received at Christmas, a toy that fails to keep your interest in the days following.

For years companies have given blockchain cursory lip service. Very few have seriously ventured into harnessing blockchain for purposes outside of cryptocurrency. But now, Facebook's decision to go all-in with Libra puts companies on notice. They will either have to get on board with blockchain or stop playing with it.

Reading Facebook's white paper makes it clear that Libra is really not about cryptocurrency at all. The Libra project is not even about the blockchain the powers it. What Facebook appears to be concentrating on are all of the potential applications that could eventually arise from its blockchain. They intend to use those applications to expand their reach online.

Libra really is about expanding the Facebook Empire. It is about increasing Facebook's current audience of more than 2 billion people to two or three times that. It is about building applications with the Libra blockchain that will insert Facebook into more areas of everyday life. And what's the ultimate goal? Making money.

Other companies have had every opportunity to harness blockchain for themselves. They have had every opportunity to use it as a moneymaking tool. Yet blockchain is useless to them if there is no commitment to it. Facebook's move shows what commitment looks like. And now it forces other companies to make a decision.

3. It forces regulators to make a decision

Business is not alone in dancing around the edges of block chaining cryptocurrency. Government regulators have been joining in that dance since Bitcoin became a thing. Leaders in many countries have tried to regulate cryptocurrency and failed, throwing up their hands in exasperation and asking, "what's next?"

Very few in the cryptocurrency community want to see heavy-handed regulation. Moreover, legitimate questions of how strictly crypto can actually be regulated remain. The one thing we now know for certain is that national governments cannot continue sitting on their hands. They either have to find a way to regulate crypto to their liking or get out of the game altogether.

Libra does not allow for any middle ground among regulators. If Facebook accomplishes its stated goals, Libra will become an international digital currency with the capability of being used by the average person as a complete substitute for fiat. What will government leaders and central banks do then?

Do not misunderstand the point here. This is not to say that we are in favor of strict crypto regulations. All we are saying is that Libra forces regulators to make up their minds. They cannot continue to play around on the sidelines and hope that things will take care of themselves. If they are going to regulate, they need to do so. If not, they need to sit down and get out of the way.

4. It sets the stage for mass adoption

Some of the early pioneers of cryptocurrency lament to this day that widespread adoption has been so fleeting. A decade ago there were dreams of Bitcoin becoming the global digital currency that Facebook believes Libra will eventually be. That hasn't happened for a variety of reasons, stability being one of them.

Libra could change that entirely. Libra could end up being responsible for global adoption of cryptocurrency within the next decade. The question is, what does Libra have that Bitcoin does not? The answer: Facebook's market reach.

Bitcoin started out as an unknown entity popular only among computer geeks and coders. It took a lot to get investors on board. But even now, with Bitcoin's price hovering around $9,000, the average consumer doesn't use it. Many of them do not even know it exists.

How many people use Facebook? Billions. How many know of Facebook's existence even though they don't use it? No one knows for sure, but the number could easily be in the tens of millions. The point is that Facebook is not facing an uphill battle in getting its name out there. Its name is already out there in an incredibly big way.

It is not unreasonable to believe that Facebook's billions of users will embrace Libra the same way they seem to embrace everything the social media platform puts out. All it will take to get online businesses to accept Libra is proof that Facebook users themselves are enthusiastic about the coin. And once online businesses are on board, their offline counterparts will follow.

5. It could overtake Bitcoin

Perhaps the most important thing of all is the very real possibility that Libra could eventually overtake Bitcoin as the world's dominant digital currency. Before you dismiss the idea out of hand, think back to when Google was in its infancy. A lot of people snickered at the idea that this upstart search engine could ever supplant Yahoo!, AltaVista, and Lycos.

Some 20 years after Google's initial launch, the California company now commands nearly 80% of the world's search engine traffic. When you throw in subsidiary sites like YouTube, Google has a hand in more than 90% of all web traffic.

For the time being, average consumers like you and I are comfortable with the idea of playing slots online with Bitcoin or Bitcoin Cash. We are comfortable with using our digital coins to buy things online and pay for travel. But while we do what we do, Facebook will be quietly changing the direction of cryptocurrency in order to make Libra more palatable to merchants, banks, and payment processors.

Facebook has the financial resources to muscle its way into the market. It has the name recognition to convince people to use Libra. Finally, it has the network resources to power its ambitious goals without barely breaking a digital sweat. Facebook already is what Bitcoin had hoped to be, just without a coin. But that changes with the introduction of Libra.

Just the announcement of Libra should be enough to cause the cryptocurrency world to stand up and take notice. If it becomes all Facebook hopes it will be, Libra will definitely shape how digital currencies are developed and used. As to whether or not it actually overtakes Bitcoin as the world's most popular digital currency remains to be seen. There is no reason to bet against it, though.

Byline: This article was published by Henry.
About: I'm a bitcoin advocate and admin of Coinbet.com.