Facebook's Libra May Rally Madison Avenue's Interest In Cryptocurrencies

Watch for interest in cryptocurrencies to spike this week -- in the media industry, if not the ad biz -- as Facebook releases a white paper outlining its plans for investors and other stakeholders.

The coin, which reportedly will be called “Libra,” is expected to be backed by a consortium of financial and transactional partners, including Mastercard, PayPal, Uber, Visa and other members of The Libra Association.

Unlike cryptocurrencies like Bitcoin, which derive their underlying value from code, Facebook’s coin is expected to be tied to a bucket of existing sovereign currencies, most likely including the U.S. dollar.

The move will enable Facebook to get into the payments business without becoming a bank or expending the resources necessary to develop and/or mine cryptocurrencies. Most of its value will be derived from facilitating transactions among its 2.5 billion global users -- with the emphasis on global.

Roughly 60% of Facebook’s users come from emerging markets where advertising and other forms of monetization aren’t likely to be significant for years. Enabling users in those markets to tap into a frictionless payments system could help leapfrog commerce in some undeveloped nations with shaky financial infrastructures.

The move is very different than other digital platforms' cryptocurrency plans -- especially Square Inc., which is building its coin on top of Bitcoin. Over the weekend, Bitcoin’s trading price soared to more than $9,000 for the first time in more than a year, presumably based on news about Facebook’s Libra.

What’s not clear is how the resurgence of interest in cryptocurrencies might impact the advertising marketplace, especially prospects for using crypto to create frictionless payments between advertisers and the media.

A number of independent firms already have been developing their own advertising-centric tokens for enabling advertising and media-buying transactions, with mixed results to date.

Among the most interesting variants are ones like Brave’s Basic Attention Token (or BAT), which compensates users for trading their attention and/or data with brand marketers.

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