Earlier today, Facebook announced its cryptocurrency “Libra” and the nonprofit association that will oversee it. “But behind Facebook’s ambitions to create a quasi-nation state ruled by mostly corporate interests is a secret weapon, one the company hopes it can use to create another platform used by billions of people — and generate enormous new revenue streams along the way,” reports The Verge. “It’s called Calibra, and it’s a new subsidiary of Facebook the company is launching to build financial services and software on top of the Libra blockchain.” From the report: At first blush, Calibra resembles a fairly standard payments company — but its tight integration with Facebook’s enormous user base could give it a significant advantage over any rivals. Thanks to its proximity to the technical development of Libra, and its ability to leverage WhatsApp, Messenger, and Instagram, Calibra could very well become Facebook’s next big thing. Calibra’s immediate goal is to develop and launch its own digital cryptocurrency wallet, and integrate that wallet into other Facebook products. The company will become a member of the nonprofit Libra Association and have equal voting power the other partners as Facebook’s official representative, which include Uber, Lyft, eBay, and PayPal, along with several other tech companies, financial service providers, venture capitalists, and fellow nonprofits. That way, Facebook can say it does not solely control the currency or the network by itself. It also gets the benefit of having twice the representation as other companies, at least for now.
Libra is the technology that underpins the network. But when it launches, Calibra will likely be how most people interact with the currency until competing wallets arise. In fact, it will likely be the first cryptocurrency wallet that hundreds of millions of people will have access to, by nature of being bundled with Facebook’s massive ecosystem. With billions of users potentially interacting with Calibra, it will instantaneously have many hundreds of times the user base of the world’s most popular existing wallets from Coinbase and others. Kevin Weil, vice president of product at Calibra, says the primary business model isn’t to make money off ads targeted using your purchase history or to charge people for using the Calibra app. The real goal, Weil says, is to boost adoption to the point where Libra can have a vibrant financial services economy built on top of it, not just by Facebook but by any other company in the world.
Weil says Libra becoming successful will have all sorts of positive ripple effects for all participants. “You suddenly have billions of new consumers for any online service. Businesses today that operate in cash only, if they have access to a digital currency they have access to advertising platforms, including Facebook,” he says. “There are meaningful side effects on Facebook’s business if Libra is successful.”