Facebook announced plans for its cryptocurrency this week, called Libra
In its white paper on the offering, Facebook explained that users can buy items or send money to people with almost no fees, and buy or cash out Libra online or at local exchange points. Libra can also be spent using Facebook’s Calibra wallet or other third-party wallet apps.
What This Means for Brands
Cryptocurrency author David Gerard told the BBC that owning its payment system would provide Facebook with a trove of data on its users’ spending habits. If only a fraction of Facebook’s 2.3 billion users try Libra, the buying details—what they buy, where and how often—could make those users very profitable to the company. This logic also applies to ads on Facebook, CBS News reports.
“If more commerce happens, then more small businesses will sell more on and off platform, and they’ll want to buy more ads on the platform so it will be good for our ads business,” said David Marcus, Facebook’s VP of blockchain, at a briefing. But Kevin Weil, the head of product for Calibra, says that Facebook will not use any of the financial data it collects from consumers to target them with ads. “This is people’s money, and we take that seriously,” Weil said. “A lot of people assume this is about improving ad targeting—and it’s not.”
Will Consumers Use It?
A December 2018 survey by YouGov found that only 31% of Facebook users say they “at least somewhat” trust the company with their personal data, while 66% say they don’t trust it much or at all. But that may not matter.
A Vox report suggested the platform’s user base is the only global population that’s big enough to organize around a single currency, and its initial list of backers includes corporate powerhouses Visa, PayPal, eBay, Thrive Capital and Andreessen Horowitz.
Of course, concerns over trust remain. As Avivah Litan, distinguished research vice president for Gartner, told USA Today, Facebook still has a lot of work to do in cleaning up fake ads. “The cryptocurrency will just magnify that issue,” Litan says. “But now you could lose your money.”