Amy Webb (@amywebb)
is the author of The
Big Nine: How theTech
Machines Could Warp
Humanity. She is
the founder of the Future
Today Institute and a
professor of strategic
foresight at the NYU Stern
School of Business.
AMY WEBB ; LEADING EDGE
What Libra Is Really About
Facebook’s digital currency could be
a very powerful tool—for Facebook.
was at a bar with some friends
recently, and, since we’re nerds,
our conversation turned to Libra,
Facebook’s proposed digital currency. Some were adamant that
it will be a safer bet than Bitcoin.
And, since Libra is backed by
Mastercard, Visa, and PayPal, they
said this blockchain-powered currency would be easier to use.
I told them I didn’t agree, because Libra isn’t simply digital
currency. Facebook and its 20-plus partners are building a
payment platform to integrate with our daily lives. Soon, I said,
I expected its authentication to be biometric—we’d have our
faces scanned rather than sign our names. And what matters
isn’t currency but data. A payment platform that connects
purchases with locations, behaviors, relationships, employment,
dining habits, and favorite memes? Libra could wield extraordinary predictive powers about its every customer.
This, to me, sounds uncomfortably like China. There, from
January to October 2018, mobile payment transactions reached
a whopping $12.8 trillion. Chinese citizens are even giving
e-hongbao—digital versions of the traditional cash-filled red
envelopes given as gifts. China’s top payment platforms are
WeChat Pay and Alipay. WeChat Pay is operated by Tencent,
the enormous gaming, social media, and e-sports empire, while
Alipay is part of Alibaba. Both continually invent new ways to
pay for things. You can already pay using your face in China—
smart cameras and kiosks use facial recognition technology to
identify and authenticate people, even if they’ve just grown a
beard, bought new glasses, or lopped six inches o; their hair.
(When consumers complained about stores’ lighting or camera
angles making them look pu;y, Alipay rolled out beauty filters.)
China doesn’t value digital privacy as we do in the U.S.,
which is one reason it has leapfrogged much of the world in
digital payments. Another is its vast size: Its 1. 4 billion people
purchasing things digitally creates an enormous data set that
can be mined—so Tencent and Alibaba can, among other things,
continually deepen e-commerce analytics and make their sys-
tems better. In the U.S., when we tap phones and smart watches
against payment terminals to activate Apple Pay, Samsung Pay,
or Google, the digital wallet often doesn’t register or returns an
error message. The number of payment companies out there
means there’s a constellation of di;erent systems and terminals.
(Even our physical credit cards don’t work consistently. Many
come with a chip and a magnetic strip; it’s up to individual
merchants to activate both systems.)
A Libra-fied cryptocurrency ecosystem could simplify pay-
ments for everyone, since Facebook seeks to make financial
transactions as frictionless as sending texts or sharing photos.
This could help the estimated 1. 7 billion unbanked people in
the world participate in everyday commerce: New users would
simply upload a government-issued ID to set up a digital wallet
to gain access to the Libra currency. This wallet—Calibra—will
be integrated into Facebook-owned Messenger and WhatsApp.
More than two dozen companies, including Spotify and
Uber, are already on board with Libra. But regardless of how
many dazzling partners Libra secures, success will hinge on
how transparent Facebook will be about how data is used and
shared, given Facebook’s history of mismanaging its users’
private information. How will consumers know if their private
purchasing details are being kept private? Will business owners
gain access to insights gleaned from all the data generated? And
what should entrepreneurs disclose to their customers?
The benefits to business owners in a Libra-fied world would
be tremendous: payment systems that work seamlessly within
Facebook; digital dashboards that o;er real-time customer
support and insights; hundreds of millions of new customers.
But I wonder whether customer data will be locked away
in Facebook’s digital wallet system, and whether Facebook will
grab and keep businesses’ valuable customer data. As Libra’s
platform grows, that data could be shared, potentially with
competitors. Which means both customers and businesses
could end up paying their tabs with dollars and personal data.