Libra and Facebook’s huge impact on the conversation around blockchain and cryptocurrency is giving fuel to other blockchain companies that portray their models as alternatives to Facebook’s controversial plans.
Two startups, Fabric and Fluree, are building a blockchain-powered payment system that’s designed to take advantage of the trend toward consumer data ownership by diluting the reliance on centralized data silos such as social networks.
The massive amounts of data that e-commerce and other financial transactions produce is enabling innovations among retailers, banks and other stakeholders, driving a race to enroll large bases of consumers — and giving the enrolling party the best position to monetize that data.
“But data producers, many of whom are consumers, can’t rely on the current, largely centralized framework comprising the internet to receive compensation for their contributions,” said Brian Platz, co-CEO of the Winston-Salem, N.C.-based Fluree, which just raised $4.7 million in seed funding from a group of investors including 4490 Ventures.
By introducing Libra, Facebook is exposing many to blockchain for the first time, marking a significant step towards familiarizing consumers with a still relatively obscure technology, Platz said.
“The next step is creating an honest, truly decentralized blockchain-supported currency and market environment merchants and consumers can trust and feel comfortable using," Platz said.
Developers use Fluree to store data on blockchain ledger, and can then make decisions about how decentralized or centralized they would like that data to be.
One use case is Fabric, a decentralized data marketplace that allows consumers to share data with advertisers in exchange for compensation.
For example, a shoe company buys a certain amount of Fabric’s “social cash” or “smart cash” and passes a portion of that revenue to consumers for sharing data. This social cash resides in a digital wallet that the consumer can either spend within the Fabric network or convert to traditional currency. A hundred social cash units are equal to one dollar.
Fabric, which is not related to the IBM-supported
“Users on Fabric have complete control of their data by controlling who has access to their data,” said Paul Taylor, CEO of Fabric.
This profile includes self-declared data such as a user’s interest, wants and planned purchases.
“The more a user interacts with brands the more they are rewarded,” Taylor said, contending merchants will want to buy in to the model because of the “influencer” factor of consumers and the theory that this model will improve click-throughs from ads to merchant sites if the consumer has more skin in the game in the form of Fabric’s “smart currency.”
The model is different from the prevailing social network model, which Fabric and Fluree contend leaves data tracking and usage under control of the social networks. Facebook did not provide comment for this story.
Fabric's cryptocurrency is exchangeable into Libra or other cryptocurrency, Taylor said. "I believe this will increase the general awareness of cryptocurrency as a payment method with merchants."
Large technology companies often make moves that have a downwind effect on smaller firms that are ostensibly rivals.
And closer to Fluree and Fabric's target market is 2018's reported data sharing deal between
“The crypto space is the 'wild west' so absolutely there will be plenty of startups claiming to do it better,” said Rick Oglesby, president of AZ Payments Group.
What makes Libra unique is the backing of Facebook and other large companies which should lend credibility to the currency, Oglesby said.
But there’s still room for alternatives, and still a need to convince the market that cryptocurrencies in general are necessary.
“What is lacking is a value proposition for consumers,” Oglesby said. “Why would they want to exchange their home currency to spend any alternative currency when they don’t have to? No one has the answer to that question, so Libra is merely another currency without a use case, albeit a more credible one.”
