From additional details in the Cambridge Analytica scandal surfacing, to its ongoing controversy about political ads, Facebook has certainly been under some pressure in recent years. As Mark Zuckerberg looks to launch Libra, we ask “is Facebook’s reputation hindering Libra, or could Libra be Facebook’s saving grace?”
It’s safe to say that Facebook has had its fair share of hits to its reputation with users. From the Cambridge Analytica scandal, to its approach political ads in the run up to America’s 2020 presidential election, not to mention the fact that it’s a constant target for nefarious parties. All in all, it’s safe to say that Facebook has a bit of an image problem right now.
However, that doesn’t take away from the positives that the tech giant offers also; with its user base of over 2billion, it facilitates free communication between friends, provides entertainment for the masses, and boosts the careers of many creatives, freelancers, and businesses across its social media platforms.
It’s no exaggeration to say that Facebook has changed the world, and it continues to strive for positive change, including bringing internet and social media services to 100 million users in the third world.
Libra, it seems, is the next step in their plan for world domination.
What is Libra?
Before we can determine the future of Libra, we first need to understand what it is. Is Libra a cryptocurrency? Well that, among other things, is actually up for debate. Libra has been hailed as the new Blockchain – the most well-known and well-used cryptocurrency there is, and like Blockchain, it has no central bank. Libra is fully digital, borderless, and pretty fast when it comes to transfers.
Where it differs from Blockchain (and loses its right to claim the cryptocurrency title – according to some) is that it’s not entirely decentralised. Blockchain transactions are verified and processed by a swarm of independent computers, but with Libra, these processes are carried out on servers owned by Libra’s corporate backers. Libra has promised a decentralised future, but the jury’s out on when exactly that will be.
One thing we can all agree on, though, is that Libra is a digital currency. It was initially dreamed up by David Marcus – vice president at Facebook Messenger, and wholeheartedly backed by Facebook CEO Mark Zuckerberg. However, it’s not just Facebook that’s involved in Libra. The Libra Association – the group behind Libra – consists of several tech industry heavyweights, such as Uber, Lyft, and Spotify, to name but a few. This number is due to increase, with The Libra Association aiming for 100 total members before launch.
The Future of Money
It should go without saying that major governing bodies are scared of Libra. If Facebook can convince its 2billion+ users to carry out their transactions using this digital currency – a move made all the smoother by the other companies in The Libra Association all offering Libra payment options – it could corner the banking market for a 3rd of the world’s population. That is serious power.
If Libra becomes the future of how we transact, Facebook and its partners could essentially establish their own financial system, create their own rules, and wouldn’t have to answer to any governments. The privately-owned financial mega-corporation that is The Libra Association would become the biggest investment fund on earth, with more power than many whole countries, and the ability to affect economies on a global scale.
Can We Trust Facebook?
With great power comes great responsibility… but is Facebook up to the task? While Libra is technically a separate entity to Facebook, it was dreamed up by one of Facebook’s most important senior executives, is represented by Mark Zuckerberg, and is currently being designed by Facebook’s engineers. Because of this, Libra’s biggest hurdle could be overcoming the reputation of the company it’s most associated with.
Here are a few of the incidents that have landed Facebook in hot water over the years:
- The Cambridge Analytica scandal.
- Facebook’s stance on political ads.
- Numerous large scale data breaches and data leaks.
- Subsidiaries Instagram, WhatsApp, and Messenger all having their own privacy concerns and negative cyber incidents.
- Privacy breaches that have led to lawsuits, and seriously costly fines.
Even for the most experienced spin doctor, there’s a lot of damage control to be done.
The Latest with Libra
If you’ve been paying attention, you may have noticed that Libra has very little support from the FSI industry. This wasn’t the case initially, as PayPal, Stripe, Visa, and Mastercard all initially lined up to be a part of The Libra Association, with their financial know-how being crucial to the success of the project.
Things took a turn for the worse, however, when PayPal was the first to abandon ship, quickly followed by the other FSI heavy-hitters – as well as eBay, for good measure. If Libra is to be successful, it has some major financial and legal hurdles to cross, and it looks like the heat in the kitchen got far too hot for these companies.
Given the potential power of Libra, Zuckerberg has been under a lot of scrutiny from the political class. The Governments of both France and Germany have vowed to keep Libra out of the EU and have backed funding for a publicly-owned digital currency alternative. Our own government has warned that Libra would have to meet strict financial standards to be allowed in the UK. In 2019, Zuckerberg was brought in front of US Congress to answer questions about this new currency, and it’s safe to say that US regulators were highly sceptical.
How Libra Can Save Our Trust in Facebook
One way that Facebook is helping to improve our trust in Libra is by separating the two organisations using technology. Concerns are mounting that Facebook could potentially use financial data gathered by Libra to boost its ad offerings, so in order to build trust and keep the two separate, Facebook has created a digital wallet called Calibra. This allows users to spend their Libra coins on Facebook and its subsidiaries, without that data ending up in Facebook’s hands.
But what more can be done? First and foremost, Zuckerberg may need to take a step out of the spotlight to allow other partners the chance to represent Libra on the main stage – it would certainly help to separate the brands and their associations. As for Facebook, tighter cyber-security and some reputation polishing are in order to give this new organisation a fighting chance.
Meanwhile, The Libra Association is in dire need of trusted FSI companies to join their ranks and stabilise financial and legal regulation. This will also include complying with governmental needs, including the US, EU, and Switzerland – where the association is based.
Finally, Facebook must empower the developing world by continuing to introduce internet and resources, while also offering the opportunity for individuals to bank securely for the first time, using this exciting new currency.
The jury’s still out on how successful Libra will be, as well as how much we can trust this new digital currency, or the growing Facebook conglomerate at large. However, Mark Zuckerberg has already changed the world in terms of global communication, and we’re interested to see if lightning can strike twice for the entrepreneur and his associates – but if it’s to do so, there needs to be a new breed of trust in place first.
Trust can make or break an organisation, and in a perimeter-less cloud-based world, Zero Trust is a great way to keep your feet on the ground. To find out more about Zero Trust, check out our blog post, or get in touch with our team.