This is one of a two-part series on why non-profits are participating in the Facebook-initiated Libra Association. For the other story in the series click here.
- Lost in Libra’s regulatory limbo has been a discussion of the cryptocurrency’s stated intention: to bring the global poor into the modern financial system.
- Many non-profits have been working on just this issue for a very long time. To its credit, Facebook recruited a few of most forward-thinking organizations into the association.
- Those non-profits who had already seen potential advantages in blockchain technology to better serve their target populations.
- Were these do-gooding organizations brought on as mere window-dressing? Women’s World Banking and Mercy Corps tell CoinDesk they won’t stick around if their missions aren’t served by Libra.
Who can unlock true global financial inclusion? Perhaps a Harvard dropout can succeed where so many others have failed.
According to its announcement materials released in June, the top priority for Libra, the stablecoin invented by Mark Zuckerberg’s Facebook, is to reach the unbanked. Yet, most of its founding partners are laser-focused on the developed world, such as Uber, Mastercard, Stripe and eBay.
So how does the association expect those who struggle the most with financial access to get their hands on its low-volatility cryptocurrency? The group’s four non-governmental organizations (NGOs) might be key.
Among the 27 founding partners (it was 28 before PayPal dropped out of the project last week), there’s a small cadre of four non-profits focused on reaching that population: Mercy Corps, Women’s World Banking, Kiva International and Creative Destruction Lab.
To date, there have only been hints about how the rollout of the Libra cryptocurrency might actually work – in part because most of the attention since June has been on regulators’ general opposition to the project. It’s easy to forget that Libra was intended for places like Uganda, Pakistan and Indonesia when its fate is in the hands of the U.S. Congress and Frankfurt.
But the impact partners are cautiously optimistic about Libra’s potential and pleased with the association’s willingness to give them a full seat at the table, despite the fact that they won’t be buying a Libra Coin, the $10 million governance token the rest of the partners are on the hook for.
“This little group of NGOs … we’re not being set up to be a hood ornament from the inside,” J. Tom Jones, chief operating officer of Women’s World Banking (WWB), told CoinDesk in an interview. “That was really important from a risk analysis perspective.”
All eyes on Oct. 14
The association is making decisions about how it will govern itself right now, and both partners CoinDesk spoke with say they believe they have a full voice at the table. Libra Association members will gather in Geneva on Oct. 14 to formally ratify the group’s charter.
“If we had been presented the opportunity to join something where all the questions were answered and everything was baked, it probably wouldn’t have been compelling to us,” Jeremiah Centrella, general counsel for Mercy Corps, told CoinDesk in an interview.
For his part, Jones saw no particular danger to his organization in helping get the new cryptocurrency off the ground.
“Ultimately, Women’s World Banking, as well as the other impact partners, we hold the ultimate decision in that we can leave,” he said. “I firmly believe if we leave, it sends a big signal.”
Since PayPal’s departure, spokespersons for Mercy Corps, Women’s World Banking and Kiva all confirmed their plans to remain in the association. Creative Destruction Lab has not replied to CoinDesk’s request for comment.
That said, if something did move the organization to leave, Jones promised:
“It’s not like we’d go quietly. If we deem this won’t work for us, we’ll say why.”
A natural question for impact partners: Are they receiving financial support from Facebook or the Libra Association? Jones declined to comment. A spokesperson for Mercy Corps said, “There was conversation around grants for actual operation. And that’s part of a conversation we’re having.”
The Libra Association has limited its impact partners to organizations with at least a five-year track record of financial inclusion programs and a $50 million operating budget.
Mercy Corps and WWB both have a strong emphasis on advancing the financial outcomes of their respective constituencies.
Mercy Corps has always taken a market-driven approach to interventions, Centrella explained. “By the time Facebook reached out to us, we had already created an executive team working group on distributed ledger technology,” he said.
Centrella’s non-profit has worked on things like microfinance and financial inclusion, seeking community-driven ways to come back from disaster or achieve economic growth. It also put out a white paper in 2017 on the potential for blockchain in the non-profit sector.
But why the early interest? Mercy Corps generally thinks cash is king in helping overcome pressing challenges. It may be more effective than other approaches, but cash has its own challenges.
Cash doesn’t work if the entire market has been destroyed, for example. It can also be difficult to physically deliver cash and to do so in a local currency. Plus, it leaves the worst paper trail (which non-profits need in order to document outcomes).
So Libra, therefore, offers hope to address some of the drawbacks of paper currency.
Libra has been constructed using some of the best features of various cryptocurrencies, and it is structured around a proof-of-stake system, one that’s very selective about who can participate early on. That architecture has had its troubles recently, but the Libra Association hasn’t shown any evidence that it will be rigid about its governance and indicated an interest in opening up participation over time.
WWB’s Jones emphasized similar points. His organization helps facilitate micro-finance (the giving of very small loans to very small business owners), rather than acting as the lender itself. This includes providing services, such as insuring short-term loans against default if borrowers need to close up shop for a few days.
And the poorest people of the world are pinched the most acutely by the global financial system’s fees.
“No cost structure,” Jones said of Libra. “That is a huge victory.”
Libra could also potentially make the system WWB facilitates work more quickly. For borrowers, he said it could eventually save trips back and forth to the bank, leaving them more time for business. For its insurance business, Libra can allow instant payments of claims.
In fact, the power of this speed came up again and again with both WWB and Mercy Corps.
Centrella offered the most vivid example, saying:
“Somebody could have a hurricane come through and end up with money in their accounts while it’s coming through.”
Influencing the juggernauts
But will Fortune 500 companies follow the advice of the non-profit crowd?
Jones said he’s been pleasantly surprised by the way his organization has been treated as full member of the association.
“At least from my exposure and participation, everything is being done by consensus,” Jones said.
Centrella noted that Big Tech’s efforts to be helpful in the developing world haven’t always worked out. Inviting the non-profits to help guide the project provides some assurance against similar missteps.
“I do work with a lot of corporate partners and I think all of them have the best intentions in what they are doing even if they are extremely removed,” Jones said. “One thing I have to say: My continuous interaction with [Facebook blockchain lead] David Marcus with his team, they just continue to demonstrate, in a very passionate way, that they really want to figure this out.”
Through the regulatory maelstrom, Centrella wants the world to let the association take its shot at these problems.
“I do hope that it will launch and if it does we are quite hopeful that it will have a transformative positive input,” he said.
And while Jones acknowledged the suspicion directed at Facebook as the lead, he was similarly hopeful, saying, “All the greatest ideas in the world were told at some point that it’s not going to work,” he said, adding:
“Why in the world wouldn’t we try?”
Ian Allison contributed reporting.
Facebook Launch New Payments System Amid Libra Concerns
- Facebook has just launched a new fiat payment system dubbed Facebook Pay.
- This payment system is designed to facilitate payments across several media platforms.
- The network has stated that the new platform of Facebook Pay is “built on existing financial infrastructure and partnerships.”
Facebook has just launched a new fiat payment system dubbed Facebook Pay, despite the regulatory backlash it has received thanks to its Libra stablecoin.
Earlier this week, the social media conglomerate revealed that it is going to be bringing in a new system called Facebook Pay. This payment system is designed to facilitate payments across several media platforms including Messenger, Instagram, WhatsApp and of course, Facebook.
VP at marketplace & commerce at Facebook, Deborah Liu said:
“People already use payments across our apps to shop, donate to causes and send money to each other. Facebook Pay will make these transactions easier while continuing to ensure your payment information is secure and protected.”
In what seems to be a move to further dodge regulatory hatred, the network has stated that the new platform of Facebook Pay is “built on existing financial infrastructure and partnerships.”
In a similarly clear sense, Facebook has said that the payment service will be kept separate from the social networks new Calibra wallet and of course, the Libra network.
The new Facebook Pay system is getting ready to start rolling out this week on both Messenger and Facebook in the United States for “fundraisers, in-game purchases, event tickets, person-to-person payments on Messenger and purchases from select Pages and businesses on Facebook Marketplace.”
Ending the announcement, Facebook ends stating their belief that the firm can “help businesses grow and empower people everywhere to buy and sell things online.”
Facebook’s 6-Year Wait Comes to An End: Patent for Personal Finance Tracking Tool Gets Ratified
Facebook gets patent approval from application submitted in 2013 for a new personal finance tool that enables financial transaction tracking as the social networking system looks ahead to Libra launch.
Facebook’s 2013 patent for a personal finance tracking tool gets approved reports BeInCrypto. As per the news outlet, the tracking tool compares a user’s financial spending to those based on relatable benchmarks. This will allow a user to have an idea of where they lie in terms of percentile.
Here’s an extract of the patent that has been shared:
“Allows its users to obtain reports of their spending compared to various benchmarks. The benchmarks may be for various demographic groups, networks to which the user belongs, groups of users connected to a user or any other suitable grouping of users.”
Given that the patent has been accepted several years later since filing for it, it becomes questionable whether this is still a goal in place for the social media outlet. With the concerns they currently face in relation to their Libra project and having been under the spotlight for breach of data privacy, taking on a finance tracking tool might not be considered.
Speaking of the Libra project, so far, leaders around the world seem to turn down the idea simply because of the social media’s scarring with data privacy and the fact that such a project would result in them having too much power. Given that Facebook has also been accused for having the ability to influence elections outcomes, adding more power can be too dangerous, especially in the financial world.
Facebook has since lost a number of partners including the likes of PayPal, Visa, Mastercard, eBay and Stripe – all early members of the Libra Association – and according to CEO, Mark Zuckerberg, whether they choose to pursue Libra or not rests in the U.S’ decision regarding regulatory approval.
Facebook Granted Patent for Personal Finance Tracking Tool Amid Global Libra Concerns
Facebook has had a 2013 patent related to personal finance approved. The patent describes a tool that tracks and compares the financial transactions of users against other users, purportedly to better help them manage their spending and note trends based on their demographics.
In 2013, the social media giant Facebook filed a patent for a tool that tracks users’ financial transactions and benchmarks it against other users from a similar demographic. The six-year-old patent has finally been approved and is yet another finance-related patent under its belt.
Facebook Granted Another Finance Patent
The patent reads:
“…obtains financial transaction activity for its users and allows its users to obtain reports of their spending compared to various benchmarks. The benchmarks may be for various demographic groups, networks to which the user belongs, groups of users connected to a user, or any other Suitable grouping of users. The social networking system may also forecast a user’s spending on a category based on the spending of other users who have similar spending profiles in other categories.”
There is no guarantee that Facebook will follow through on the patent, as technology companies are notorious for filing patents without ever bringing a related product to light. It is, however, a stark reminder of the exploitative nature potential of companies that already possess a vast amount of user data. Facebook has been front and center at much of the data privacy worries that have emerged in recent years.
Facebook’s suspect nature has also made its presence known in the recent debacle that has been the Libra cryptocurrency. Critics argue that it is a vast power grab by Facebook, which already holds an enormous amount of influence — certainly enough to affect elections and public opinion. It is argued that a move into finance would only give the company more power in more industries.
Looking to Other Means for More Influence
Facebook’s Libra cryptocurrency has endured several salvos worth of criticism in recent months, after lawmakers across the world, in addition to incumbent crypto entities, have criticized it the project for being an overreach. Several members of the original 28-member Libra Association have already departed, including Visa, MasterCard, PayPal, eBay, and Stripe.
The backlash does not seem to have stopped Facebook from continuing on in its goal. Facebook founder and CEO Mark Zuckerberg was recently questioned by the United States Congress on Libra, and said that it might come to the point where Facebook would have to leave the Libra Association if it did not receive regulatory approval from the United States.