Facebook made waves in the fintech world this week with the announcement of its cryptocurrency, Libra. Designed as a payment method, the new coin will allow users to send payments simply and quickly.
While many cryptophiles are profoundly concerned about what a Facebook coin will do the market, Wall Street is happy to see the new offering. In fact, among analysts, the new tech-focused financial instrument is seen as strongly bullish for the social media giant.
Stopping the Anti-Trust Lobby
For starters, Facebook has been facing a host of anti-trust threats from regulators. With the company acquiring a number of social media outlets, the danger of being forced to break up has grown.
However, according to analysts at SunTrust, the Libra coin offers a way to branch out and reduce anti-trust concerns. Because Libra moves into new fields, it mitigates the company’s holdings in the strictly social media category — allowing for a more-balanced business model.
Additionally, it’s no secret that cryptocurrencies are being used in regions with struggling economies. Bitcoin and DASH, for example, have already been widely adopted in Argentina — where inflation has reached epidemic proportions.
However, because of Facebook’s massive user base in developing countries, the potential for Libra to immediately steal this market share is real. Rather than being forced to create new digital wallets to hold Bitcoin or other cryptocurrencies, users could simply open their Facebook account to make payments.
This simplicity, analysts say, could mean that Facebook’s new offering could become the digital currency of choice in developing nations. Regardless of ethical issues, this would be a massive boon for the company. According to analysts at MoffettNathanson,
“We believe a Facebook cryptocurrency-based payments system could be especially useful in countries with high inflation/unstable banking systems and for cross-country remittances.”
Libra vs. Bitcoin?
In the final analysis, the company will almost undoubtedly create a system that will find adoption — but, as a Bitcoin alternative, the centralized Libra may offer little more than a simple credit card. The results, regardless of analyst opinion, will come out in the wash.
DO you Libra is a bullish sign for Facebook’s bottom line, or will it turn out to be a gimmick that no one uses? Let us know in the comments below!
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