Calibra: Facebook's Real Cryptocurrency Strategy – Beyond Libra

Amid the hype around Facebook’s plan to launch its own cryptocurrency, Libra, there’s one big question. How is the company going to profit from it?

The project relies on developing blockchain technology. But blockchain’s whole raison d'être is to challenge the way corporate capitalism and businesses like Facebook make money.

Facebook has also established, with several dozen equally capitalistic partners, the Libra Association, a nonprofit organisation based in Switzerland, to spearhead the venture.

Identifying key personality traits can be used to predict purchasing behaviour – or political preference, as demonstrated in the Cambridge Analytica controversy. The British-based political consultancy bragged it effectively swung the US 2016 election to Donald Trump by using Facebook to harvest user data and then directing customised political messages to users’ newsfeeds.

While there is some scepticism about Cambridge Analytica’s electoral impact, it is generally agreed the process of “micro-targeting” can be very effective for marketers.

So the more information Facebook has about you, the more money it can potentially make by influencing you.

Becoming bigger than Amazon

There’s more.

Facebook’s value as an advertising powerhouse has made its founder, Mark Zuckerberg, extremely wealthy – worth an estimated US$73 billion. But that’s less than half of Amazon’s founder, Jeff Bezos, who’s worth US$158 billion.

Both companies are in the business of helping merchants sell products. But Amazon’s position as an online marketplace is more lucrative than Facebook’s role as a shop window. Amazon can take a cut from every sale. Its retail business makes up about 80% of its US$950 billion value, which is greater than Facebook’s total value of US$550 billion.

What if Facebook could be both the shop window and the cash register? What if it no longer just introduced users to merchants but also became the digital marketplace supporting those merchants? What if it could collect not just social data but also buyer history data?

This is what Libra, and more critically, Calibra, could mean for Facebook.

Libra’s an important part of this picture. But it’s Calibra that could deliver the data Facebook needs to become possibly the most valuable, and powerful, online company in the world.