Cynicism works. It pays off. Especially when it is laudatory. No that's not an oxymoron. It describe perfectly what Facebook's (FB) doing for the unbanked, the two billion plus people who not only don't have plastic, they are in countries with currencies that often prove to be unworthy of their own peoples' needs.
So many people are justifiably suspicious of Facebook that the company had to come up with some way to change its appearance in Washington, some way to move away from the sense that it violates privacy on the altar of profit.
I think this initiative, which is run by David Marcus, formerly president of Paypal (PYPL) , will do it.
Libra, the initiative, is taking advantage of the Facebook message platform to let individuals who live in challenged currency countries transact without losing value every second to the whims of its government. Forty-eight percent of the people who are part of Facebook's far-reaching network live in unstable currency countries that make their nest eggs vulnerable to the lack of value storage. Now there is a currency that can maintain that storehouse.
Even better, because Facebook doesn't want to make any money on this, there is the possibility that it can quickly take off in 2020, using the Facebook Messenger product.
Now one day, once an individual is hooked, there might be the possibility of a payment. That's irrelevant right now. What Facebook needs to show is how many hundreds of millions of people still trust it so that Congress can see how silly it is to keep browbeating this company.
That's because one of the most important initiatives in this actually selfless -- at least at first --venture is to disintermediate the pernicious check cashing operations in troubled, unbanked neighborhoods. Having gone to one in a tougher section of Philadelphia with Jamie Dimon last year to open some branches, I can tell you there are still plenty of areas in this country in the inner cities were denizens are being ripped off left and right. This new Libra currency, with its blockchain method of transfer, blunts that and uplifts residents, residents who vote, residents who are often defended by the most vociferous Facebook critics.
Now Facebook has done an awful lot to spoil its reputation. Endlessly so. But this initiative, which disenfranchises the large banks like JP Morgan (JPM) , which takes such a big slug of the percentage of the credit card transactions while embracing Mastercard (MA) , Visa (V) and most important Paypal, is perfect as a method to blunt those in Washington who think that Mark Zuckerberg is just out for himself.
It will cost FB money. They aren't getting much from these partners. It doesn't matter. The sums they are giving are just enough to show that this currency -- which is not crypto but is what crypto was meant for, a way to triumph over weak fiat bills -- has their backing. That's all that's needed to befuddle the critics.
I salute Facebook for helping people leapfrog credit cards all the way from cash to digitization. It's a terrific reason to sign up for Facebook. It's a terrific reason to stop the Facebook bashing.
It's a terrific reason to buy the stock.