Cryptocurrencies have become one of the most talked-about and intriguing financial and technological innovations of recent times. Despite Bitcoin being launched a decade ago in 2010, it is only now over the last few years that it has gained a lot more attention. The huge price rise, and subsequent fall, that Bitcoin saw in 2017 was one of the biggest events which drew people’s attention, and it also caused many to invest in cryptocurrencies. This growing interest in a phenomenon which could change the way finance works in the future has now been picked up by big corporations as well.
One recent example of this has been the announcement by payments giant PayPal that it would begin accepting cryptocurrencies on its platform soon. This will definitely bring cryptocurrencies to a lot more people, while at the same time, corporations are also looking at ways to launch their own currencies and digital coins. The biggest case of this is with Facebook, which announced its digital currency, Libra, to a storm of publicity and attention last year. There was a lot of scrutiny on this proposed launch from regulators all over the world, which has resulted in Facebook announcing that a slimmer version of the currency will be going live in January 2021.
Libra was initially going to be launched with multiple currencies in the basket, including the euro, pound and dollar, among others. However, the new plans will see only a single coin, backed by the dollar, being launched at the moment, with the composite as well as the other currencies to be potentially added at a later date. Libra submitted its application for approval of this venture in May 2020, and it is hoped that this will be received in time for the January launch. It will also be interesting to see how well Libra is received upon launch. Bitcoin is of course entrenched as the most commonly-used cryptocurrency, with the likes of Ethereum following behind. It may make sense for Facebook to partner with specific entities, brands and sectors to improve word of mouth publicity as well as brand awareness and adoption. One way of doing so would be to target sectors which have already been using crypto, such as online gambling. There are quite bitcoin games which offer players the option to transact in cryptocurrencies, and Facebook could offer them the option of replacing bitcoin with Libra, as a way to get people using their cryptocurrency.
Libra remains one of the biggest examples of a social media company looking to enter this lucrative space. The use of blockchain as the underlying system for crypto is one of the biggest factors for its popularity, as blockchain offers a slew of benefits as well. Cryptocurrency payments are safer, quicker and more reliable as a result, making them nearly impossible to hack or commit fraud on, for example, while customers’ privacy is also maintained with regard to their personal and financial information. All of these features make cryptocurrencies as attractive as they are.
It is also interesting to note that Libra has been renamed to Diem, to do away with the negative connotations that the name Libra had with regulators and people globally, due to the intense scrutiny placed on it. It remains to be seen how popular this new cryptocurrency will be, but it is encouraging that the project leaders behind Libra/Diem have pledged to put robust policies in place which would tackle money laundering, terrorist financing and other concerns that regulators have with the potential use of the cryptocurrency.