Facebook showed technology muscle by announcing plans to launch a new global digital currency ‘Libra’ by year 2020

The currency will be built on two new technology stacks, blockchain and artificial intelligence

The company said the currency will be separate from Facebook itself, and what we use their currency to buy online is none of their business

The currency will be 100% digital

It has already gotten 28 partners for the project, each contributing at least 10 million dollars as venture capital

Partners include Visa, Mastercard, Vodafone and Uber

First off all, what is a currency

A currency is a generally accepted form of money, including coins and paper notes, which is issued by a government and circulated within an economy including the digital economy. Used as a medium of exchange for goods and services, currency is the basis for trade

Generally speaking, each country has its own currency. For example, Nigeria’s official currency is the Naira, and United States’ official currency is the U.S Dollar. An exception would be the euro, which is used as the currency for most countries within the Eurozone

The core characteristic of most currencies is its capability as a medium of exchange

Enter Cryptocurrency

A cryptocurrency is a digital currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of this security feature. Many cryptocurrencies are systems based on blockchain technology, a distributed ledger enforced by a disparate network of computers. A defining feature of most cryptocurrencies, is that it is not issued by any central authority, rendering it immune to government interference or fraud

Given that Facebook has been in the Technology business since 2004, it knows firsthand how tech has transformed many international banks

Still about 2 billion adults lack access to financial services, which is crucial to escape poverty

Facebook is seeing both a problem and an opportunity

x <- c( 35, 61, 64,65,81,  127,319, 506, 2400)
labels <- c("Canada", "UK","France","Italy","Germany", "Japan", "United States", "European Union", "Facebook")
pct <- round(x/sum(x)*100)
lbls <- paste(labels, pct) # add percents to labels
lbls <- paste(lbls,"%",sep="") # ad % to labels
pie(x,labels = lbls, col=rainbow(length(lbls)),main="Percentage of account holders between G7&Facebook")

Statistics shows that Facebook has about 2.4 billion active accounts. To put that into perspective, if Facebook were a country it will have more active account than all the G7 countries combined.

But it doesn’t end there

Most of the unbanked adults are in developing countries where Facebook sees growth and active usage of it’s services

We’ve seen startups like Stripe, Transferwise, and Flutterwave transform how teams work and get paid across borders

Libra will facilitate trade globally by low transfer fees and fast way to pay and receive money online

H <- c(35, 60 , 64 , 66 , 81 , 506 , 2380)
M <- c("Canada", "Italy", "France", "United Kingdom", "Germany", "European Union", "Facebook" )
barplot(H,xlab="April 2019",ylab="G7&Facebook account holders ",col=rainbow(length(lbls)),names.arg=M, main="account holders in millions",border="red", horiz=TRUE)

If the audacious task of creating a digital currency works, Facebook will grow from a social media behemoth to a global financial authority peharps more powerful than U.S. Federal Reserve System and other G7 central banks.

About the author

Ugonna Alinnor is the principal consultant of Cartwheel Consulting, a Machine learning consulting company based in Lagos, Nigeria. Ugonna is also the author of Deep learning with R https://www.experfy.com/training/courses/deep-learning-with-r

Ugonna is also passionate about training the next generation of African data scientists and routinely works with professionals about adopting data science best practices. To learn more contact Ugo at alinnorugo@gmail.com