Economy

Facebook to launch its own cryptocurrency, Libra, in 2020

Facebook to launch its own cryptocurrency, Libra, in 2020

Calibra will be integrated in Messenger and WhatsApp along with launching as a standalone app, and Facebook envisions a future where you'll be able to spend, send, and save Libra as easily as you would send a message to someone.

What we know: It is scheduled to launch sometime in the next six to 12 months.

Unlike a crypto such as Bitcoin, Libra is a stablecoin backed by real-world assets, meaning holders have "high degree of assurance" that they can convert coins into traditional currency based on an exchange rate.

Facebook was long-rumored to introduce its own cryptocurrency. "Facebook has built a global phenomenon through reinventing what we've come to understand as a user experience".

But the company should wait until the US Congress has examined the project, according to the chairwoman of the House Financial Services Committee.

Users will be able to send money to each other initially, at low to no cost, Facebook said in a statement, implying that later, a small commission may be taken from transactions. Facebook is taking the lead on building Libra and its underlying technology; its more than two dozen partners - including PayPal, Uber, Spotify, Visa and Mastercard - will help fund, build and govern the system.

Calibra would conduct compliance checks on customers who want to use Libra, using verification and anti-fraud processes that were common among banks, Facebook said.

Once Libra launches in 2020, people will need to provide a government-issued ID to set up an account.

Having the currency operate on a separate platform means Libra users' activity is separated from Facebook, meaning it's not shared with other parties, such as advertisers.

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Facebook and 27 organisations have formed a non-profit association which aims to empower billions of people that are unbanked. "Coins are only minted when authorized resellers have purchased those coins from the association with fiat assets to fully back the new coins".

Facebook, the social media giant, is the newest member of the crypto world after it officially launched its whitepaper on its website today. The company selling the product could then use that token to buy more ad space on the social network, and so the cycle would start anew. Now, Facebook's grand plan for a new digital currency called Libra could bring the three men together again - though it remains to be seen whether there'll be enough drama to warrant a sequel to "The Social Network", the 2010 film based on the story of Facebook's founding.

Facebook's announcement was met with immediate backlash from USA lawmakers and regulators across the globe, who are concerned that Facebook is already too massive and careless with users' privacy.

Eventually, anyone holding a sufficient quantity of Libra will be entitled to some voting power, and the initial documents published Tuesday by Facebook lay out an explicit goal to move toward a totally nodeless blockchain more similar to Bitcoin's.

"The idea that we are going to turn over our financial data and information to that company, I think they have a big uphill effort to try to convince Americans that they ought to trust in Facebook's proprietary interest in keeping your data secret".

There are almost 1.7 billion adults without a bank account or access to financial services globally.

Facebook said it would not make any money through Libra or Calibra but was seeking to "drive adoption and scale" before exploring ways to monetize the new system.

Meanwhile, cryptocurrency investment firm KR1 co-founder George McDonaugh also welcomed the arrival of Facebook in the cryptocurrency market as well as the potential arrival of other big tech firms looking to displace banks.