Facebook shared its highly-anticipated cryptocurrency plans with the announcement of “Project Libra,” which is a new type of digital currency that can help billions of people on apps and social media network.
If all goes according to plan, Facebook will give users a chance to shop on Messenger and Instagram using their cryptocurrency called Libra. The Facebook currency will also be available for e-merchants like Spotify, MasterCard, and Uber. Facebook has yet to provide details on the exact date of the currency debut and how consumers will be able to purchase Libra, but the social media platform executives are teasing that WhatsApp and Messenger users will get it by 2020.
In addition to the Libra currency, Facebook also revealed its digital wallet brand named Calibra. The digital wallet will act as a subsidiary operated by the social media platform to give users a digital storage system. Although the wallet will not be available for the public in the coming months, Facebook users already know the features of Calibra. The digital wallet will display a user’s Libra based on their local currency and contains a design that is similar to Venmo when it comes to money transfer. Facebook revealed the image of Calibra, which includes Libra’s three-wave symbol that will serve the same as the $ of US dollar.
Project Libra Head David Marcus announced that the company’s mission is to provide a banking system for over 1.7 billion Facebook users worldwide who do not own bank accounts. Marcus said that the Internet has no money transfer protocol. He also adds that Project Libra will give financial services institutions more stiff competition that will potentially increase capital.
Facebook Spearheading the New Cryptocurrency
While Facebook is taking command of Project Libra, the company is only a member of dozens of non-profit organizations and companies that will manage the new cryptocurrency through a Swiss institution. The Libra Foundation is comprised of corporate members that must contribute over $10 million to help jumpstart the new currency. The contributions may likely fall into the user’s Calibra in small amounts during the first tests.
Facebook has 27 corporate partners for the project, which includes MasterCard, Coinbase, Paypal, and Visa. Venture capital businesses like Union Square Ventures and Andreessen Horowitz are also part of the partnership. When the currency eventually makes its debut, Marcus hopes to secure over 100 partners that already have an agreed-upon formal charter for rules and regulations with the new cryptocurrency.
Like many blockchain networks, the Libra blockchain will be able to provide users with a secure transaction record. However, Libra will have a more private blockchain since running a node is only available for foundation members. Bitcoin and other cryptocurrencies often use public blockchain networks. Also, members will supply Libra and destroy them when users redeem them. Members also need to maintain a reserve fund to help keep the currency’s value high. The Libra unit will mirror the value of the likes of US dollars, euros, pounds, and Swiss francs to avoid the unstable movement that is common in cryptocurrency.
However, Facebook’s launch of Project Libra also comes with criticism, especially after battling against regulators and facing a long list of controversial privacy issues. Facebook plans to use its new language called Move as the program for the cryptocurrency’s open source blockchain. The Move will become a transaction record and a new layer where third-party users can create smart contracts.
Facebook hopes that customers will see Project Libra as a financial service. Dante Disparte, Libra Association’s policy head, states that US consumers must provide a “know your customer” before being able to use Libra. Because of the policy, many questions why Facebook is a part of Project Libra since discretion is one of cryptocurrency’s privileges. Facebook executives’ response to the critics is that the social media platform sees it as an opportunity to enter the remittance market while providing users with an efficient, cheap, and more trustworthy way to transfer funds internationally.
Disparte also noted that there are users who are already using WhatsApp in the process of collecting remittances. Disparte says that the users’ trust in WhatsApp will make it easier for them to accept Libra, which will be tradeable in the phone app.
Since Facebook already advertises products and goods for every user, Libra will provide a way for them to make immediate purchases. With the new strategy in mind, Facebook will have a better idea of how to target each user’s shopping behaviors, which is essential in generating revenue using advertising.
Many are aware of Facebook’s privacy scandals, which may make them feel worried about the potential threat of invasion when they use Libra. The new cryptocurrency may provide the controversial social media platform with another way to track and invade the privacy of users. As a solution, Facebook defended itself saying that the Calibra wallet is a separate product from its company. Facebook also assures users that the companies behind the cryptocurrency are also a part of the process, which will eliminate the threat of Facebook seeking opportunities to keep an eye on its users’ shopping habits.
Facebook’s Potential Breakthrough with Libra
Facebook’s Project Libra is an ambitious gamble since most startup multi-company blockchain fields garnered failed results. Libra may also be a threat to the US government, which will take the new cryptocurrency as a competing replacement for the US dollar. However, Marcus found that most countries are aware that cryptocurrencies will continue to spread and that Libra is only among the digital assets that will give people an alternative way to transfer money.
Facebook’s partners may also benefit from Libra. Companies that have credit card payment methods for users like Spotify and Uber will likely find a new payment process for customers who do not have cash or cards with them.
Overall, Facebook’s potential profit in Project Libra remains unclear, especially if users are starting to lose trust in the social media platform. However, the public announcement of Project Libra means that Facebook is going all in on the venture and that the users now hold the key to its success or failure.