Facebook will release a cryptocurrency later this year that will allow WhatsApp users to send money instantly. Project Libra is definitely uncharted territory that raises a number of important theoretical questions about the viability and application of their stable coin, the Global coin.
The Market For Digital Payments
In the contemporary world, global digital payment options are taking an ever-increasing share of the payment market. Cash is continually on the decline and we may very well have a future where cash will be relegated down further. Ironically, in the west users are under the leash of banks.
Even in mobile payment applications like Apple Pay, the banks can still have a share of the fees. This is because these payment channels are mostly tied to users’ cards and banks accounts.
Mobile Payment Solutions
The rise of mobile payment options is challenging to mainstream institutions. This is because the purely mobile payment channels will cut the banks out and make transactions smoother. The rise of payment apps like AliPay and WeChat make the market change drastically. This is because these apps can remove banks and card companies from this market which is worth tens of billions of dollars annually.
WeChat and AliPay are trailblazers in this sector. The two essentially dominate the payment industry in China with low cost faster solutions. The ability to receive and send payments using your phone is obviously an advantage. People in China have easy solutions and commerce is better and more efficient with mobile payment solutions.
Bitcoin has definitely had a hard time introducing mainstream consumers to the alternative world of digital coins. Therefore, Facebook will seek to succeed where Bitcoin and other altcoins failed. Obviously, impeding crypto has not succeeded because of limited market understanding and regulatory hurdles. Naturally, Mark Zuckerberg and co. would go for the more exciting innovation. Cryptocurrency success can be attributed to Facebook and take a fledgling innovation back on top. That said, the idea of market efficiency should not elude innovators and developers.
If Facebook is looking at an alternative payments solution, why not study the model of AliPay and WeChat? The American payments market is ripe for mobile payments solutions takeover. Mobile payments, as it has shown in China, are a convenient and lucrative option.
Facebook can launch a separate digital payment option for mobile that is not necessarily blockchain-based. This would arguably be more convenient for the social media giant. Indeed, it would be unwise to get into the crypto market simply for the sake of having a share in the crypto market. Facebook should, therefore, launch a coin that will definitely improve the whole crypto industry. Otherwise, it should look at and replicate other payment options in the market.