Since Facebook announced its cryptocurrency project Libra, many have questioned the company's choice to build a payments system on top of a blockchain instead of existing banking infrastructure.
In a blog post published on Wednesday, Libra cofounder David Marcus attempted to justify Facebook's move, saying that building on top of existing banking rails won't reduce cost or open the financial services system to the masses.
Marcus points out that the existing banking system is siloed and outdated, with banks forming segmented networks that do not efficiently connect with each other. Therefore, moving money between bank accounts requires a lot of intermediaries, which incur high transaction costs.
In comparison, Libra can enable wallets around the world to transfer money at "an incredibly low cost" by eliminating intermediaries, according to Marcus.
"People would benefit from more ease when they want to send and receive money, and the barrier of access to modern digital money and financial services would be greatly lowered — enabling billions to have access to these essential services and to the world’s economy," Marcus writes.