Americans Have Trust Issues with Facebook’s Cryptocurrency

Cryptocurrency is going mainstream. 

In June, Facebook’s subsidiary, Calibra, announced that it was entering the cryptocurrency game with its own digital currency, Libra. That means by 2020, you may be able to trade in your dollars for Libra tokens, store those tokens in a digital wallet, and use them to buy things from participating vendors around the world or send them to others, like a Venmo or Paypal.

CivicScience looked into general interest and public concerns surrounding Libra when the news first broke. In a survey of 1,799 U.S. adults, just 5% total expressed any level of interest in the proposed digital currency.

The small “interested” group tended to skew younger, with 18- to 24-year-olds showing the most interest. Compared to others in the survey, the Libra curious also clocked in as heavier Facebook users and had more experience with mobile payment apps, like Venmo and Apple Pay.

While initial reception for Libra in the U.S. is low, where does it sit in relation to other cryptocurrencies? Bitcoin may still be the darling of the cryptocurrency world, but can Libra give it a run for its money?

Cryptocurrency in the Wide Angle

A July survey of more than 2,100 adults found that the majority of Americans (79%) have heard of Bitcoin or other cryptocurrencies, such as Litecoin, Ethereum, or Ripple, but most Americans aren’t holding or using Bitcoins or cryptocurrency and aren’t planning to. Overall, 6% of respondents have invested in cryptocurrency: 3% invested and like it; 3% invested but don’t like it. 

Results from surveys attempting to determine cryptocurrency ownership in the U.S. vary. For example, a recent Harris Poll survey with a similar sample size found that 11% of the U.S. adult population owned Bitcoin, specifically. A 2018 survey estimated that under 8% of Americans owned cryptocurrencies. 

Yet despite the overall low percentage rate of cryptocurrency investors, the market is growing, reaching over $200 billion and one Bitcoin trading at more than $10K, at the time of writing. Where does Libra fit in? The surveys show broader interest in cryptocurrency across the board, with 7% interested in investing, compared to Libra alone.

The difference may lie in the intended use.

Reasons for Cryptocurrency Investment

Gauging reasons behind interest in cryptocurrencies, the survey showed the top reason in the U.S. was long-term investment, and not usage as an actual currency. That was followed by short-term investment and then independence from government.

Further down on the list was use as a currency for easy, fast and safe transactions, as well as a hedge against adverse economic conditions.

According to the Libra white paper, Libra’s focus is all about its use as currency to buy/sell goods and send funds, particularly for those living in developing nations with limited or no access to banking and subjected to high fees for financial transactions.

But while Bitcoin and many other cryptocurrencies are unregulated by third parties and have to be released into the digital sphere by ‘mining’, that’s not the case with Libra. In comparison, even though it still uses blockchain technology to secure transactions, Libra will be overseen by the Libra Association, made up of several founding members other than Facebook/Calibra, including Paypal, Mastercard, eBay, and Uber, to name a few. Also, Libra is backed by a basket of global currencies and funds (more about how Libra works here).

While that may reduce the wild volatility that has made cryptocurrencies difficult to actually transact with, it also strays from the truly unregulated and speculative appeal of cryptocurrency. 

The Trust Factor

Although Libra is still in its infancy and its interested audience is small and niche, it will be interesting to see whether regulation by the Libra Association, as well as Facebook’s involvement, will work for or against capturing future users.

Given Facebook’s track record of privacy issues, it’s not surprising to find that the majority of survey respondents don’t trust Facebook at all with their personal information and data: 

That could play into Libra’s adoption. Looking at trust in Libra and its digital wallet, the survey found that 40% of respondents trusted Libra less than Bitcoin and similar cryptocurrencies, with the majority trusting it “much less.” Only 2% trusted it more, while close to 20% felt they trusted Libra ‘about the same,’ with the remainder feeling uncertain.

It’s worthwhile pointing out that, even though less than 10% of respondents have invested in cryptocurrency at all, a significant percentage feel less trusting of Libra than of Bitcoin or other digital currencies.

More research is needed to find out why people feel this way, but if the data are any predictor, then Libra founders have work to do if they want to win over more than 5% of the American public. Couple that with government officials working to halt the whole operation, for a slew of various reasons. 

Similar to when Bitcoin first mysteriously surfaced ten years ago and brought with it the cryptocurrency gold rush, no one really knows what to expect when some of the largest corporations in the world collaborate to create their own version. Regardless, it’s definitely an exciting trend to watch unfold.