A recent report from Binance Research claimed Facebook's Libra is as disruptive for the payments industry as SpaceX was for interstellar travel — but why?
When it entered the rocket sector, SpaceX found an industry laden with high entry barriers and largely dominated by public market players, a Binance Research representative told Cointelegraph in an email.
Therefore, the industry also yielded "little movement, as there were hardly any incentives to innovate beyond incrementally improving the product," the rep said. "The same is true for the current payments landscape."
Borders limit the current payment systems
In a recent in-depth report on Facebook's Libra, Binance Research concluded Libra will shake up the payments world in the same disruptive manner Elon Musk's SpaceX did in the rocket sector.
Central banks control the majority of payment structures, calling for large networks dependent on mass usage, as well as requiring sizeable starting investments, the Binance Research representative said.
"Because CB's [Central Banks] usually operate large value payment systems (real-time gross settlement systems, or RTGS's), most payment systems are domestic, not global," the rep explained.
The rep did mention examples of private players, although those participants are elder statesmen, entering the payments game long ago.
New entrants shake up the system
With the introduction and establishment of Transferwise and other fresh blood, the payments world has seen some innovation, but it is not anything on Libra's level. "Transferwise is still rather retail-focused," the representative said, adding:
"If Libra was to launch it would be Transferwise on steroids that caters to a large retail and business audience and could thus start a new wave of innovation and fundamentally change the current payments landscape."
As numerous countries explore central bank digital currencies, Libra's global framework still appears to have the upper hand. It's difficult to predict how such a system might affect the global economy. Regulatory pushback also continues against Libra, making a launch date unclear at this time.