/ Money

Would you join the Bank of Facebook?

Were you astonished to hear the news that Facebook plans to launch its own cryptocurrency? Would you trust it with your cash?

Perhaps I shouldn’t be as surprised as I am about the announcement. After all, Facebook seems to dominate the lives of many people, harvesting personal data in the process – it makes sense that it would seek to control our wallets, too.

The new cryptocurrency, named ‘Libra’, has had development input from the likes of Visa, Paypal and even Uber.

Users can make purchases or cash out Libra online or at exchanges such as supermarkets.

It is expected to be initially accepted by the likes of Mastercard, eBay, Spotify, and Vodafone, which have all been involved in its creation.

With an audience of billions, Facebook has the potential to create a banking game-changer; a truly global currency.

What about data privacy?

There’s no getting away from it – Facebook’s record on data privacy is not good. So would you trust it with your money?

Will highly sensitive information about its users’ finances be secure? Will Facebook track what we spend and who we send money to? And could this information be used to feed more targeted advertising?

I finally lost faith in Facebook after the Cambridge Analytica data scandal and closed my account last year.

We must also acknowledge that Facebook has a problem with scams on its platform and must do more to tackle it. If it’s struggling to get a handle on the situation now, why add cash to fuel the fire?

Facebook says its digital currency will make transfers and in-app payments seamless for its users. But could an element of anonymity make things easier for scammers? For me, it’s a concern.

Do we need another cryptocurrency?

A positive is that Libra wants to focus on reaching millions of people who don’t have, or can’t have, a bank account. It will give them access to buying, transferring and saving money online.

Guide: Bitcoin and ‘blockchain’ explained

I want to hear more about Facebook’s plans for account security. I’m curious to know how it plans to safeguard money and honour consumer law while it’s in its hands.

Despite the controversies, Facebook continues to grow and connect the world. For a social network, I think it’s still mostly a positive thing.

I want to see Facebook prioritising its anti-scam operations and proving that it takes our security seriously before it gets involved in our money.

Would you trust Facebook with your money? Do you think its move into cryptocurrency is a good idea? Do you share my concerns about the risks? Let me know in the comments.

Comments

Really good piece, Lauren. A couple of thoughts to add …

Whenever you see any project that talks about using the blockchain, the first question to ask yourself is: “Does this project actually need a blockchain?” The answer to that question is always “nope”. The second question to ask yourself is “is there anything that a cryptocurrency will do better than actual fiat currency?”, and again the answer is always “nope”. For more on the reasons for that, this blogpost (https://bankunderground.co.uk/2018/11/13/the-seven-deadly-paradoxes-of-cryptocurrency/) from the Bank of England is an excellent primer.

So what is Facebook up to? If you ask Facebook, it will talk about lofty ideals of giving the unbanked access to digital payments, taking on the banks, transforming the world, etc etc. However, that ignores one or two quite big points: first, the unbanked are often very disadvantaged and unlikely to be the kind of people who fall on this kind of “innovation” with grateful alacrity. Second, there are plenty of existing, blockchain-free, technologies that help the unbanked access digital services, including pre-paid cards and mobile money services such as M-Pesa.

But mostly, Facebook is doing this to get access to even more data and make even more money. Payments data is gold: if you think Facebook already knows a lot about you, think about how much more it will know about you if you pay for stuff via Facebook. Given the issues Facebook has had with trust, I for one will not be in a hurry to sign up to this.

The FT’s Alphaville has a brilliant series on this – well worth registering to read. This primer goes into lots of detail about all the issues https://ftalphaville.ft.com/2019/06/18/1560848464000/Alphaville-s-Libra-cheat-sheet/?shareType=nongift

I will absolutely not be joining the bank of Facebook.

The only way FB could be any more dire would be if they appointed Trump as a vice president.

I thought he was a Twit?

I don’t trust Facebook with any of my data, particularly financial data.

I find Facebook useful to help to publicise the work done by a small charity and to publicise events. I have no ‘friends’ and do not put any personal information on Facebook.

I have no intention of having anything to do with the Facebook bank. With all the criticism about data privacy, I would like to know why Facebook has been allowed to become involved with banking.

I will certainly not be using it. Facebook have a huge issue with scam ads that they’re clearly not addressing, so I have no faith their money app will be much better.

John says:
22 June 2019

Bank of Faecebook? I trust that organisation about as far as I could throw this planet.

Like it! You rarely see it spelt correctly.

Nice!

Kevin says:
22 June 2019

Would you trust Facebook with your money?
No, Facebook simply behaves in line with it’s commercial imperative to monetise it’s users [or victims] data, behaviour, intentions and subconscious weaknesses.

Do you think its move into cryptocurrency is a good idea?
It’s a great idea for Facebook’s stockholders. It’s business model, monopoly position, and global reach mean it will amplify it’s pernicious effect on society.

Do you share my concerns about the risks?
The risk from Facebook’s exploitation of it’s users is hard to quantify, but it’s sales model is effectively to manipulate individuals, society, and politics, for money. How long before we reach the singularity when it’s power will mean we’ll no longer be able to hold it to account?

I entirely agree with you, Kevin. I often wonder when the penny will drop with people and they will realise that, in return for a false sense of friendship, connectivity, personal identity, and other normal emotions encountered while growing up, they are being used for mercenary commercial purposes where their every communication and response is being analysed to see if it [together with the reactions to it and te other users connected with it] can be mined for trade and further exploitation by businesses greedy for personal data. The notion that 100% of that will be honest, legitimate, and in the user’s interests, is totally unsustainable.

Social media is essentially parasitic and, on balance, does the world and its people no good at all. Vast organisations, with massive computer power, have been set up to extract and deliver the data wealth released by every participant every day. Large numbers of people are employed to devise and create more channels and streams to yield the precious material and market it for commercial purposes. Large numbers are also employed to monitor, ‘regulate’, and ultimately control the networks and interactions, but this activity is not adding any value to the economy or producing anything tangible to benefit mankind. There could be some trickle down from the people engaged in this activity and from servicing their functions but this is not a genuine economic good, It is also hidden, almost invisible, and secretive. The ‘self-regulation’ is merely there to keep the authorities at an appropriate distance from the operation and thus enable it to develop unrestrained.

Another sad fact is that, as well as sucking in a huge proportion of the population, such is its power that every other company, organisation, government department, broadcaster, media channel, and so on, has felt obliged to get involved at a further hidden cost to consumers and taxpayers generally. Again, it exploits the juvenile desire not to be on the outside of a circle for fear of ostracism or personal disadvantage.

The social and psychological consequences of this are gradually starting to emerge but it is now too late to put the genie back in the bottle.

I totally agree with both of you.

Younger people are leaving FB as it ain’t cool to have your parents and grandparents friend you.

So FB could be onto a loser.

Coates Peter S says:
23 June 2019

Why is everybody attacking the use of cash and cheques and now banks are no longer accepting coins, why change something that’s worked for 100s of years

Charlotte Rossi says:
25 June 2019

I do not Trust the So called Bank of England !!! Who Actually Owns this??????

Facebook are completely untrustworthy, their agenda is one of the most biased in the world today. I would rather stack my cash under my mattress than trust that mob.