Facebook entered into the world of cryptocurrency with its own digital money “Libra” designed to let people save, send or spend money as easily as firing off text messages.
Facebook and some two dozen partners from US and Uk released a prototype of Libra as an open source code to be used by developers interested in weaving it into apps, services or businesses ahead of a rollout as global digital money next year.
A Geneva-based nonprofit association will monitor the Libra, maintaining a real-world asset reserve to keep its value stable.
The initiative has the potential to allow more than 1.7 billion “unbanked” people around the world access to online commerce and financial services, said Libra Association head of policy and communications Dante Disparte.
“We believe if you give people access to money and opportunity at the lowest cost, the way the internet itself did in the past with information, you can create a lot more stability than we have had up until now,” Disparte told Pixr8 News.
Libra Association debuted with 28 members including Mastercard, Visa, Stripe, Kiva, PayPal, Lyft, Uber and Women’s World Banking.
Libra has the potential to bridge the gap between traditional financial networks and new digital currency technology.
Facebook will be just one voice among many in the association but is separately building a digital wallet called Calibra to transfer Libra money online.
“Many people who use Facebook are in countries where there are barriers to banking or credit.” Calibra is being built into Facebook’s Messenger and WhatsApp with a goal of letting users send Libra as easily as they might fire off a text message.
Libra learned from the many other cryptocurrencies that have preceded it such as bitcoin and is designed to avoid the roller-coaster valuations that have attracted speculation and caused ruin.
Real-world currency used to buy Libra will go into a reserve backing the digital money, the value of which will mirror stable currencies such as the US dollar and the euro, according to its creators.
For the digital currency to operate on a global scale, Libra is relying on a platform of blockchain technology that uses about 100 trusted computer “nodes” to validate and register transactions.
The Libra Association will be the only entity able to “mint or burn” the digital currency, maintaining supply in tune with demand and assets in reserve, according to Barel.
“It is not about trusting Facebook, it is effectively trust in the association’s founding organizations that this is independent and democratic,” Disparte said.
The launch comes with Facebook seeking to move past a series of lapses on privacy and data protection which have tarnished its image and spark scrutiny from regulators around the world.
Chief executive Mark Zuckerberg has promised a new direction for Facebook built around smaller groups, private messaging and payments.
Financial information at Calibra will be kept strictly separate from social data at Facebook and won’t be used to target ads, Calibra vice president of product Kevin Weil said.
For people without access to banks, local money could be swapped for Libra at traditional currency exchange houses or businesses offering such services.
France demands ‘guarantees’ on Libra:
After the launch, many leaders in the industry and world doubt over the reason behind it. France’s finance minister said Tuesday that strong guarantees were needed over the use of cryptocurrencies after Facebook announced it was leaping into the market with its own digital money.
Finance Minister Bruno Le Maire, whose government has also initiated a new tax on digital giants like Facebook that has angered the United States, said such digital money could never replace sovereign currencies.
“If Facebook wants to create an instrument for transactions, why not? But there is no question that this can become a sovereign currency,” he told Europe 1 radio, saying a “limit” had to be set.
“It cannot and must not become a sovereign currency, with all of the attributes of a currency” such as the capacity to issue sovereign debt and serve as a reserve currency.