"Libra’s success, if it comes, will likely proceed in stages, with different challenges and competitors at each stage:
- Initially the most obvious use case for Facebook’s Calibra wallet application will be peer-to-peer payments, which means the competitor will be applications like PayPal’s Venmo. Here Facebook’s biggest advantage will be leveraging its network and messaging applications.
- The second use case will be using Libra to transact with merchants, who stand to benefit both from reduced fees relative to credit cards as well as larger addressable markets (i.e. potential users who don’t have credit cards). Note that none of Libra’s Founding Members are banks, which impose the largest percentage of credit card fees; Visa and Mastercard, on the other hand, are, like PayPal, happy to sit on top of Libra.
- The largest leap will come last: Libra as a genuine currency, not simply a medium for transaction. This will be function of volume in the previous two use cases, and is understandably concerning to governments all over the world. This, though, is another advantage of Facebook giving up direct control of Libra: while regulators will be able to limit wallets like Calibra (which will fully abide by Know-Your-Customer and Anti-Money-Laundering regulations), Libra — particularly if it achieves a fully permission-less-model — would be much more difficult to control."