Is It Safe to Pay Your Bills Through Facebook?
Facebook is slowly seeping into every aspect of our daily lives. Calling, messaging, photo sharing, event planning, blogging, marketing, gaming and journalism — you name it, the media giant has its hands all over it.
So why not have it all? Why not venture into finance too?
That seemed to be the mentality of Facebook CEO Mark Zuckerberg when he announced the company’s new cryptocurrency set to be released in 2020.
‘Libra Coin’, a US$1 billion project, is ‘a simple global currency and financial infrastructure that can empower billions of people’, according to Facebook. It has already been in development for the past year and is perhaps the biggest indication that crypto is going mainstream to date.
Not only will the coin allow Facebook’s 2.4 billion users to change all currencies into Libra coins with no fees, but it will also allow customers to buy goods on the internet and transact without a bank account. (Harje has an in-depth article on Libra’s functionality which you can check out, right here.)
This has the potential to be a huge shakeup in the finance world, as Zuckerberg told a developers conference back in April:
‘Payments is one of the areas where we have an opportunity to make it a lot easier…
‘I believe it should be as easy to send money to someone as it is to send a photo.’
There will also be a separate digital wallet where you can access your coins, called Calibra, which can also be used through Facebook Messenger and WhatsApp.
Facebook’s crypto will not fall in line with the libertarian ideology of concepts like bitcoin, however. Although it will be more decentralised than traditional money, it will also be backed by 12 of the world’s largest corporations including Mastercard, Uber, Visa and PayPal.
Each of these companies have invested $10 million into Facebook’s crypto project and will have the right to oversee and administrate as a result.
It will also be fixed to a number of traditional currencies to prevent the massive price fluctuations that have ruined the reputation of cryptos at large.
These steps are intended to restore the public’s perception of digital currencies in the wake of numerous hacking scandals and investing manias. And also to simplify the process of sending money across the globe.
As Zuckerberg wrote in a Facebook post, Libra Coin plans to be a streamlined version of the current crypto model with none of the pitfalls that plague the current financial system:
‘Being able to use mobile money can have an important positive impact on people’s lives because you don’t have to always carry cash, which can be insecure, or pay extra fees for transfers…
‘We aspire to make it easy for everyone to send and receive money just like you use our apps to instantly share messages and photos.’
But will this assurance from a CEO that has been in the firing line for deception numerous times be enough to assuage our fears?
A revolution or more dubious promises?
Many, understandably, have been critical of this move after the myriad of data scandals (i.e. Cambridge Analytica) Facebook has been involved in over the past few years.
US Senator Sherrod Brown was one critic who believes Facebook’s crypto endeavour should be heavily regulated:
‘We cannot allow Facebook to run a risky new cryptocurrency [which is backed by stable devaluating dollars] out of a Swiss bank account without oversight. I’m calling on our financial watchdogs to scrutinise this closely to ensure users protection.’
Regardless, Facebook is still steadfast in their view that now is the time to venture into an industry which is founded on trust. Instead of restoring that very emotion within their user base first.
Zuckerberg has assured the public that any information you share on the Calibra platform will be separate from your Facebook information. And also that it will be regulated like all other finance providers.
But, and this is a huge but, Calibra’s terms of service do point out that your financial data may be shared with Facebook and vice versa under limited circumstances.
So will user’s transaction history truly be kept separate from Facebook’s other services? Or will our data be used against us in overwhelming advertising campaigns?
No one knows just how this will play out. But no doubt it will increase Facebook’s already gargantuan power and influence exponentially. Instead of merely sharing mundane updates about your day, you could soon be using Facebook to pay your bills, making it an even more essential feature of your day-to-day life.
Libra could also catapult crypto into the minds of people who weren’t aware of it previously — perhaps resulting in a popularity spike in other cryptocurrencies and the tech market as a whole.
Whether or not it’s completely safe to use is still up for debate. But one thing’s for sure: now is an exciting time to be a tech investor.
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All the best,
Editor, Money Weekend