ERIC POSNER: The Trouble Starts If Facebook’s New Currency Succeeds. “Libra will almost exactly replicate all the problems generated by the company’s social network.”

via theatlantic:

Libra will be big. Facebook has 2.4 billion users, and if, as Facebook promises, they can costlessly, seamlessly jump from their Facebook accounts to their Calibra wallets to spend money, many of them will do so. Visa has issued more than 2 billion credit cards and is used by more than 40 million merchants. Vodafone has 444 million customers. Uber has 91 million riders. With such a huge user base—many of whom are already the helpless playthings of Facebook’s algorithms—the Libra reserve will grow rapidly.

As Libra becomes a juggernaut, expect other huge companies to sign up for membership and then integrate Libra into their operations, delivering millions or billions more users. Currency, like communication, exhibits strong network effects—meaning that it becomes more valuable as more people use it. So the strategy Facebook used so effectively to build its social network—lure in customers with zero-pricing and then make money off them without their realizing it—will work just as well for Libra. Here, though, customers will enrich Facebook and its partners through interest payments on the reserve rather than exploitation of their data—though that might happen, too.

Lots to chew on here; read the whole thing.

 

 

h/t SG

 

 

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