You may have heard of Libra; the new digital currency Facebook announced in late June to allow people to make easier money transactions across the globe. Trumpeted by Mark Zuckerberg, it could really be a financial game-changer as it will be accessible to the about 2.4 billion Facebook users, regardless they have a traditional banking account or not.
The cryptocurrency is set to launch in 2020, and it now under lawmakers’ and regulators’ scrutiny. However, why should CIOs worry about it? Because Libra might have a significant impact on businesses.
First of all, being out of intermediated financial exchanges, Libra is expected to make international transactions much cheaper, facilitating cross-border commerce without the burden of domestic currencies and foreign exchange commissions. That would be particularly interesting for global companies, with potential savings of hundreds of thousands of dollars per year.
Also, do consider Facebook built the currency on its own blockchain technology. So, unlike bitcoins and other cryptocurrencies, Libra should be able to prevent the level of volatility common in the digital currency space. Being a stable coin, it would not move up and down like bitcoins, and this would make Libra fit for daily use, not just for financial speculation.
We usually think of the bitcoin community as a niche of techies and highly experienced digital experts. Bitcoin was introduced more than ten years ago, but active users are still a few. If analysts are right, Libra might drive the massive adoption of cryptocurrencies, and change the expectations of customers around this technology. Simply put, a company that does not deal with Libra might face severe business limitations, just like a retail shop that does not accept digital payments.
Integrating Libra and cryptocurrencies into existing commercial, financial and administrative processes will not be peanuts, and CIOs are well aware of complexities, time and effort that would be required.
There is still some time before the actual Libra launch, and lots of details about regulatory compliance, transaction security, identity and privacy protection need to be clarified. However, if Facebook’s project does take off, it might have a potentially disruptive effect on the digital economy. Moreover, businesses should better be prepared for it – starting from their CIOs.