Facebook Unveils Plans for Digital Currency
The social media network has announced plans to create an alternative global currency that would be the foundation for a new ecosystem of financial services.
Facebook will expand beyond social networking into e-commerce and global payments with the launch of Libra, its blockchain-based financial infrastructure project, the company announced in a press release on Tuesday.
Calibra, Facebook's new financial services subsidiary, will introduce a digital wallet for users to save, send and spend Libra instantly with almost no fees anywhere in the world. It will be available in 2020 in Messenger, WhatsApp and as a standalone app, Facebook said.
The company has already announced 27 partners, which include names like Visa, MasterCard, Stripe, eBay, Vodafone, Coinbase, Uber, Andreessen Horowitz and more. They will be part of Libra Association, a Geneva-based entity that will govern the new digital coin.
Reaching the Unbanked
In its announcement, Facebook noted that basic financial services are out of reach to large parts of the world's population, which it hopes to address with the introduction of the digital currency. «The cost of that exclusion is high — approximately 70 percent of small businesses in developing countries lack access to credit and $25 billion is lost by migrants every year through remittance fees,» Facebook said.
Calibra's app interface (Image: Calibra)
«In time, we hope to offer additional services for people and businesses, like paying bills with the push of a button, buying a cup of coffee with the scan of a code or riding your local public transit without needing to carry cash or a metro pass,» Facebook said about its plans for Libra.
«Intrinsic Value»
While it is built on the same principles as Bitcoin, Libra, which is inspired by Roman weight measurements, the astrological sign for justice and the French word for freedom coin, will be backed by a reserve of assets – a basket of bank deposits and short-term government securities that will be held in the Libra Reserve for each coin issued.
This is «designed to give it intrinsic value» and mitigate volatility, according to its whitepaper.
