Social media giant Facebook on Tuesday released a white paper on Libra, a form of digital money it plans to launch as early as the first half of 2020. According to a statement made by the company on its official website, Libra was defined as a new widely accepted cryptocurrency designed to have a stable and reliable value.
Facebook will not be the sole owner or manager of the new currency, as it has partnered with 28 other entities on the project, including eBay, MasterCard, PayPal, Spotify, Uber, Visa, and Vodafone, among others. According to a report in TechCrunch, these partners have initially pledged at least $10 million each for the new venture.
Rumors about Facebook venturing into blockchain technology had steadily gathered pace since it was revealed in late May that the social media giant was a major stakeholder in a new financial services firm registered in Switzerland. On Tuesday, The Verge reported that Libra Association—the governing body of the new cryptocurrency—will be based in Geneva.
Here’s What We Know About the New Facebook Cryptocurrency So Far
Libra is a form of digital currency that will let users make purchases on the internet, transfer money across the world with nominal charges, and cash out the digital coins at a local grocery store or money exchange. Facebook plans on first introducing the currency in developing countries as an alternative to cash transfers between individuals who do not have access to banks.
The currency will be a form of blockchain known as stablecoin, which means that the value of Libra coins will be tied to real-world assets such as government securities, international currencies, and bank deposits. This will add stability to the value of Libra as compared to other cryptocurrencies. Facebook plans on selling security offerings based on Libra as well.
The governing body of the new currency has reportedly decided to keep the exact value of one Libra close to the value of one U.S. dollar when the currency is launched early next year.
Facebook Wants Libra Adoption In Myriad Ways. And It’s Prepared to Address Concerns.
Facebook has launched a management tool for the new currency to widen the appeal of the new blockchain. According to the company, a digital wallet named Calibra will be available in the first half of 2020 to save, send, and spend Libras. The new wallet will be accessible through Facebook applications such as WhatsApp and Messenger, as well as third-party platforms.
According to a report in TechCrunch, the members of the Libra Association have been tasked with fundraising to start the currency ecosystem and designing incentive programs to reward early adopters of the currency in addition to their governing responsibilities. Each association member will only get one vote on the decision-making council to encourage transparency.
Every time someone exchanges their local currencies for the Libra coins, the money they change will be sent to a reserve set up by the Libra Association. The interest earned on this reserve will be divided among the investors in the new cryptocurrency. Reports suggest that the new currency could be cashed out on ATM machines all over the world too.
Small business owners will also be offered incentives and discounts for accepting Libra as a form of payment, contends a report in PC Mag. The moves are seen as a Facebook bid to set up a network of businesses that only accept Libra as payment.
The California-based company is a social media and advertising giant, with more than two billion in the world signed on as users to different platforms owned by Facebook. Scandals related to data privacy have dented public trust in the firm in recent years. However, Facebook has tried to address these concerns in the cryptocurrency white paper.
Facebook has pledged that the social data of users and the financial data gathered by their use of Libra will be kept separately. According to the technology firm, Libra users will not necessarily have to be users of Facebook applications, since third-party support for Libra will be available. A tiered security process to setup Libra accounts will secure private information.
There’s Good and Bad News About the Facebook Pivot to Crypto
Facebook aims to enlarge business by this venture into financial services, and even though the primary initial beneficiaries of the digital currency may only be the people who do not have access to banks, the company could gain public trust back with charging nominal fees for money transfers across international borders.
However, since the crypto market is largely unregulated, analysts at Citibank have said that the project could just be just another attempt by Facebook to print even more money than it is already making. The convenience of being able to interact with businesses selling products inside Facebook applications could prove to a huge benefit for social media users.
If Libra succeeds, not only will Facebook get a new revenue source, but advertising revenue on the existing Facebook products would increase too. It remains to be seen how the general public reacts to the rollout of cryptocurrency accessible at the touch of a button.
Usman Kabir covered science, space, and technology for Globely News. As a kid, he would make models of the solar system and take part in water rocket competitions. His childhood obsession has led him to a degree in Space Science. Usman likes to spend his free time watching reruns of "Curb Your Enthusiasm" and "Seinfeld."