Libra claims it’s all about the unbanked. Well, it appears the unbanked live in the United States as well, and several financial and tech companies in America are looking to implement their own blockchain platforms to assist citizens of their own nation.
Libra Doesn’t Necessarily Need to Exist…
According to a survey released in 2017, over eight million people in the U.S. do not have bank accounts. Typically, these people fall well below the poverty level. This is enough, Facebook claims, to make Libra a reality. The fact is that there are simply too many people underrepresented by their financial institutions to hold any sway in modern society.
But according to Rivka Gewirtz Little, research director of global payment strategies at the market intelligence agency International Data Corp, one doesn’t need access to a whole new coin to earn their due. Facebook is creating its own coin for other reasons, though those reasons have yet to be disclosed. The answer lies in making banking services accessible to all and building a whole new currency from scratch isn’t likely to solve that many problems.
You don’t actually need a new currency to make all that happen. What you need are fair and accessible services.
Case in point: M-Pesa, a remittance firm that began in Kenya in the year 2007. Started by wireless companies Safaricom and Vodafone, the two enterprises created their own platform that would allow customers to send Kenya’s national currency, the shilling, to different banks in ten separate countries located in Europe, Asia and Africa.
This is not necessarily done with a digital coin or through a whole new coin at that. In addition, the services are available in multiple continents, yet in many ways, the service is kept relatively simple. It involves one coin and sending it as necessary to participating banks. So, why is Facebook going through the entire process of building a whole new currency?
According to Little, the reason is because the U.S. has a very low track record when it comes to fintech adoption. Products associated with the fintech space have not held as much sway in the U.S. as they have in other developed nations, and most of these products typically require a standard connection to traditional financial firms. Facebook is creating Libra because it simply doesn’t know what else to do.
Giving the Unbanked What They Require
Little, however, believes this is on the verge of changing. M-Pesa, for example, doesn’t have a competing company in the United States, but T-Mobile offers services similar with those of M-Pesa. The cell provider and other phone and internet service companies are now being examined by nonprofit groups such as the Financial Clinic.
This organization takes it upon itself to work with financial unstable or underbanked people and connects them to companies that can offer them the services they need.