In June 2019, Facebook announced the next stop on its journey towards world domination with the unveiling of Libra – in its own words, ‘a global currency and financial infrastructure’, scheduled to launch in 2020 and tasked with giving financial freedom to the 1.7 billion people around the globe who don’t have access to a bank account.
Put more simply, Libra is a digital asset built by Facebook, using a new encrypted technology similar to that of blockchain, the tech used to power Bitcoin and other cryptocurrencies. Despite the technology being developed by Facebook, overall responsibility for its operation lies with the Libra Association, an independent, not-for-profit organisation formed to validate Libra transactions and to manage the reserve Libra is tied to. It will also allocate funds to social causes.
Currently, Facebook have not confirmed how they will distribute the new currency however it is likely that the brand will use an ‘air drop’, releasing small amounts of cryptocurrency to Facebook users free of charge to increase its popularity. To support itself, Libra will be sustained by adding small fees to each transaction. In many cases, this will be absorbed by the vendor, although very small price increases may be visible on Libra-costed goods.
So how will Libra impact influencer marketing? On the surface, Libra is pitched as an altruistic enterprise, developed for the benefit of refugees and those in low-income countries. However, coming only a few weeks after the launch of Instagram Checkout, Libra could also be a way for Facebook to monetise transactions through their social media platforms. As Instagram Checkout increases in popularity and expands its reach it’s likely that Libra will be rolled out as a currency option for transactions. This allows Facebook to take a percentage from every purchase made through Instagram, similar to how influencers receive commission via affiliate links.
Any functions that streamline a consumer purchase journey also has the potential to improve influencer marketing campaigns, as the ability to track Instagram e-Comm will provide influencers with a whole new suite of insights on their campaigns to share with brands. Super influencers are already utilising Instagram Checkout and this will trickle down the influencer network as it becomes more widely available.
Big business is already welcoming the introduction of the Libra to the market, with companies including as PayPal, eBay, Spotify, Uber and Lyft all investing a minimum of $10 million (£8 million) into Libra, giving Facebook contributions of over $1 billion towards the new currency. This cross-industry support, lent some of the most powerful titans of tech, indicates there are big plans for Libra and synchronisation across the platforms, both social and otherwise, isn’t out of the question.
Despite the philanthropic core, the launch of Libra has caused a sense of unrest in the world of finance. The movement of social media firms into currency runs the risk of undermining the stability of the global banking system, moving control of monetary policy from the central banks into the hands of private business. Despite this, prior to the announcement of Libra, the Bank of England stated that they are willing to cautiously welcome the introduction of digital currencies, although they will not be developing their own cryptocurrency, and instead will be relying on tight controls over the private sector initiatives.
The other elephant in the room concerns the ongoing issue of Facebook’s data misuse. The brand is currently facing multiple court cases surrounding its user privacy, so how do they plan to protect Libra users from similar issues? This is clearly concerning policymakers as well as the public, with California Congresswoman Maxine Waters stating, “Facebook has data on billions of people and has repeatedly shown a disregard for the protection and careful use of this data. With the announcement that it plans to create a cryptocurrency, Facebook is continuing its unchecked expansion and extending its reach into the lives of its users.”
The data Facebook will have access to through Libra will be of great value to them for this very reason – it allows Facebook to tailor advertising to individual users across their platform. Doubtless the Libra Association has been founded as a safeguarding mechanism for the cryptocurrency and a means by which to regain consumer trust, while distancing Libra from past scandals.
As Facebook turns its gaze towards new markets beyond social media, it’s becoming clear that nothing is off-limits or too ambitious. But this move isn’t unprecedented. Take the example of Chinese social media platform WeChat, who have been facilitating payments with digital wallet service WeChat Pay. As of yet WeChat has not launched its own currency, however it has significantly increased the amount of mobile payments in China by over $15tn since 2012. With Facebook’s ownership of WhatsApp, integrating chat, payments and cryptocurrency is a natural progression for them to maintain their social media domination.
Overall, it remains to be seen how the social media landscape will have changed by Libra’s launch in 2020, but inevitably it will increasing the power of purchasing via social media, bringing opportunities for influencers to work on the platform.