Dan Levy, editorial director at Smooch argues that Facebook’s cryptocurrency could be the tipping point that conversational commerce has been waiting for.
After months of hints and speculation, Facebook finally unveiled its cryptocurrency earlier this week. Called Libra – a name that’s meant to evoke justice and freedom – the coin is part of Facebook’s ongoing pivot away from its controversial newsfeed and towards private messaging.
As Mark Zuckerberg observed in a blog post in March, while public social channels like Facebook offer users a digital “town square,” the rise of messaging signals that people increasingly prefer to “connect privately in the digital equivalent of the living room.”
Facebook owns the two most popular messaging apps in the world – WhatsApp and Facebook Messenger – which, along with Instagram – collectively boast more than 2.7bn users. But Zuckerberg seems to be keeping a close eye on the world’s third most popular chat app. That would be WeChat, the Tencent-owned platform that dominates the digital landscape in China, thanks to a built-in payment system that allows users to pay bills, play games, order food and do pretty much anything else you can think of without leaving the app. With Libra, Facebook is looking to bring the WeChat model to the west – and the phenomenon known as conversational commerce to the mainstream.
Libra, which is expected to launch next year, will be a “stablecoin.” That means it will be pegged in value to old school currencies like the dollar or euro, protecting it from Bitcoin-like fluctuations. The project is being led by David Marcus, a former PayPal exec who oversaw Facebook Messenger before starting the blockchain initiative last fall.
Developing its own currency would let Facebook bypass credit card and bank fees and enable users to send money around the world using Messenger, WhatsApp and Instagram, which the company is in the midst of merging into one chat app to rule them all.
Get in LINE
Facebook isn’t the first messaging player to develop its own cryptocurrency. Telegram raised $1.7bn to fund its crypto project and both LINE and Kakao, the leading chat apps in Japan and S. Korea, have jumped on the blockchain bandwagon, with Kakao’s platform set to launch this month.
Last week LINE announced a partnership with Visa that will let its 187m users apply for credit cards within the app. The blockchain angle is that the two companies will use blockchain for B2B and cross-border payments.
On the other side of the coin, anonymous messaging app Kik was sued earlier this month for raising money by selling its cryptocurrency, Kin. The SEC accused the Canadian company of failing to register sales to US investors.
Facebook is hoping it can keep regulators at bay by tying the coin’s value to traditional currencies and creating an independent non-profit, the Libra Association, to govern it. The Libra Association includes companies like Uber, Visa, PayPal, Spotify and Stripe. Traditional banks and messaging competitors like Google and Apple are notably absent.
According to reports, the coin may soon be available at ATMs. When you consider Facebook’s global footprint – WhatsApp alone has 1.5bn users – it’s easy to see how this could be the moment digital money goes mainstream. The fact is, the messaging companies have a reach that dwarfs the backers of earlier cryptocurrencies.
When Chris Messina started talking about conversational commerce back in 2015, many assumed payments would be the killer feature that brought WeChat-style business messaging to the western world. That didn’t happen.
Instead, as the major messaging channels slowly opened their doors to businesses through services like Apple Business Chat, WhatsApp Business API and Google Business messaging, brands focused on delivering delightfully personal and frictionless experiences through chat, growing customer loyalty and satisfaction along the way.
Of course, buying stuff is a key part of the customer experience. And doing it via messaging is about to become a whole lot easier.