Facebook recently made waves when it announced its upcoming release of Libra, an independently managed cryptocurrency tied to the social media juggernaut. Though Facebook is a bit vague in these early stages, the main idea seems to be using Libra as a way to further monetize the Facebook app, taking advantage of the billion-plus users already using the app regularly.

Economists, social media experts and entrepreneurs alike are talking about this upcoming release. Some of them are curious, wondering about the potential of tying a cryptocurrency to an existing app like this. Others are skeptical, fearing what this has in store for the future of social media use.

So what kind of impact could this have on social media startups of the future?

The Libra Association

First, let's dive a little deeper into what Libra is and how it will function under Facebook's flag. Planned for release in the first half of 2020, Libra is going to be a traditionally built cryptocurrency, relying on the blockchain to function. After its launch, the currency will be governed by the Libra Association, which will comprise 100 founding members. Libra will be available through a crypto wallet called Libra, which people will be able to use through Messenger and WhatsApp.

Facebook hopes the cryptocurrency will increase customer loyalty even further, giving them even more reasons to remain in the app. It could also give the company more revenue-generating options, increasing its value to advertisers.

Facebook Libra's Impact on Other Social Media Startups

Entrepreneurs and business leaders are looking to Facebook's example and wondering how they can use this development to their own advantage. Some have already started to incorporate their own built-in digital economies.

Take, for example, Uhive, a new kind of social network that allows you to connect with your friends and family while remaining mostly anonymous. It utilizes its own unique digital currency, the Uhive Token, allowing users to conveniently and quickly make economic exchanges with one another. The fundamental concept is very similar: use a digital currency to increase the value of the app to users and advertisers alike. On Uhive, users who practice normal social activities on the app will be rewarded; Uhive plans to share a portion of ad revenue with users on a weekly basis in exchange for their engagement.

Uhive's app exists across two main features: the "Civilized World," which models more traditional social media apps with 26 core interests and the opportunity to build a personal profile, and the "Grey World," which is an anonymous experience that's completely shaped by your imagination. The app will also support virtual reality (VR), giving users an even more immersive experience. The app is releasing in beta this October.

Other social media apps have been designed without advertising, without data mining, and without any walled sections. These are designed as a more private and open source experience, which could cater to users who don't want any currency tied to their social media account.

Libra is bound to be a polarizing introduction to the social media world. New startups that emerge and begin to flourish will likely follow one of two paths: they'll either attempt to offer a closed digital economy of their own, capitalizing on the trend and increasing the loyalty of their users, or they'll reject the idea and strive for more user privacy and app transparency.

In some ways, this could make launching a new social media startup even more challenging; existing apps are going to have more loyal users than ever before, and creating a digital currency from scratch to compete with them can be resource intensive. But in other ways, startups are going to have even more opportunities.

Facebook and Uhive are not alone in trying to create their own cryptocurrency. For example, there's the Malaysian airline Air Asia, which is developing its own digital currency called BigCoin. Frequent flyer points can be converted into BigCoin and ticket prices also have a BigCoin value. There's also Mitsubishi UFJ Financial Group, one of the largest banks in Japan (and the world). Last year, they announced plans to launch a currency called MUFG Coin, hoping to capitalize on customers using their digital wallets to manage this cryptocurrency.

Digital Currencies as a New Norm

It may seem strange for Facebook to get involved in the cryptocurrency business, but we're in the middle of a broader trend that could last for many years. New startups and seasoned entrepreneurs both understand the enormous potential of digital currency, so they want to integrate it into their businesses however they can. Only the most innovative, best integrated, and most trustworthy platforms are likely to succeed.

Published on: Sep 9, 2019
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.