Facebook is getting ready to unveil a new digital currency program, Libra, to use with its apps. The cool thing about it? It can make it easy to make purchases in-app. The bad thing about it? It can make it easy to make purchases in-app.
Today’s cashless technology makes it faster to make snap decisions on purchases big and small. Now that Facebook is adding a financial element to the mix, users must consider how it could impact their finances.
More than half of Americans report they feel stressed about finances. And social media plays a big role in influencing purchase decisions, especially in millennials.
Here is a breakdown of what the new Facebook cryptocurrency entails and how it could impact your finances.
What is Facebook Libra cryptocurrency?
First, let’s define what the Facebook Libra cryptocurrency is. Libra is technically a “stablecoin” which is a type of cryptocurrency that is meant to hold its value against other currencies.
The digital tokens can be used on Facebook, WhatsApp, and Instagram. Expect to see big names partnering with Facebook for this program, including:
- and eBay among others.
A Facebook-only currency exchange program could help the 2.6 billion Facebook users stay locked into the app longer. Keep in mind, you can already send money on Facebook through their Messenger platform, though many people don’t take advantage of it. Only 2% of users stated they used the payment app.
Facebook cryptocurrency could streamline purchases
With a more robust digital currency program in place, you could be more inclined to purchase through built-in ads and Facebook groups. Facebook Marketplace, the buy and sell component to the social media app, could make it easier for buyers and sellers to exchange money, too.
Imagine if you could sell an unwanted item locally to pay down your debt and get paid instantaneously through Libra. It could eliminate cash confusion or the use of third-party payments apps, like Venmo.
Plus, there’s the protection of using your Facebook crypto account as opposed to your credit card or debit card information. You get the option to shelter your bank account information and transact with vendors via Facebook with Facebook money.
It can also ruffle financial feathers
But there are some downfalls that could set you back financially. Suppose you get addicted to how easy it is to buy products and services via Facebook. It could easily become another source of debt for some. Imagine exchanging credit from your Visa card in exchange for digital currency using Libra.
A survey from Charles Schwab found that one-third of Americans are influenced by what their friends share on social media, and confess they spend more so they can avoid FOMO (the fear of missing out). The more we see friends spend money on material goods and experiences, the more we spend in turn.
Libra may make it too easy to shop in-app, thus crushing your ability to do things like pay off your student loan debt or invest for your retirement.
And let’s be clear, bitcoin and digital currency still have a long way to go. Potential users should be cognizant of the SIGNIFICANT risks associated with cryptocurrency.
Then there’s the whole privacy issue
We can’t ignore the privacy issues that have tripped up Facebook over the years. So it begs the question: how much more personal information do you want to fork over to Facebook? Linking up your bank information is a concern, no matter which online platform you use.
You might find reassurance that big financial service providers like Visa and Mastercard are involved. The goal is to have 100 companies involved in the cryptocurrency program. Strength in numbers, right? Though this could muddy the waters if another data breach and exposes sensitive bank account information.
The history of mishandling user information on Facebook’s platforms should give users pause before opting-in to this program.
Facebook’s new cryptocurrency program could help users make in-app purchases more easily and encourage users to shop within the app.
But it could make it hard for you to tackle other areas of your finances if you’re not careful. In addition, users should consider how their information will be protected within the program.
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