Facebook said on Tuesday it will launch the token, called Libra, next year in partnership with finance and technology heavyweights including Visa Inc. and Uber Technologies Inc. Unlike other cryptocurrencies, Facebook emphasized, Libra is backed by "a reserve of real assets", with an equivalent amount of real currencies and assets held in reserve for every Libra that is created.
Coincidentally, the name Libra comes from the Roman measurement of weight - its why we measure pounds of weight in lbs.
However, consumer privacy concerns or regulatory barriers may present significant hurdles for Facebook, whose services already boast more than one billion users. Libra will let you send money to nearly anyone with a smartphone, as easily as a text message and at "low to no cost", Facebook says.
Recently, Facebook has been assembling investors into its "Libra Association", a who's who of major payment and tech companies willing to invest $10 million each into Project Libra.
"We view this as a complement to Facebook's mission to connect people wherever they are; that includes allowing them to exchange value", Calibra vice president of operations Tomer Barel said. "We can not allow Facebook to run a risky new cryptocurrency out of a Swiss bank account without oversight". Local regulations will also have to be obeyed where Libra operates - it's not clear where the currency will launch initially. Despite the lack of access to financial services, most of these unbanked people own a mobile device.
"Freedom, justice and money, which is exactly what we're trying to do here", Marcus said in an interview.
Facebook said it is forming a new subsidiary called Calibra, which aims to "provide financial services that will enable people to access and participate in the Libra network". The goal is for Libra to be used outside of the social network as well: Consumers may eventually be able to use it to pay for a cab or a cup of morning coffee. Visa, Mastercard, Uber, Spotify, and eBay are all onboard, which means these companies may accept Libra payments in the future. It's the same technology that bitcoin and other digital currencies use.
Users will be able to send Libra via the Calibra app easily in a few minutes and will eventually be able to conduct various purchases such as buying stuff by scanning QR code paying bills, and more.
Harsh Sinha, chief technology officer of forex payments firm TransferWise, described the lengthy regulatory processes that his firm had to go through to set up a network to move money around the world, including getting approval in every single U.S. state.
"Given the company's troubled past, I am requesting that Facebook agree to a moratorium on any movement forward on developing a cryptocurrency until Congress and regulators have the opportunity to examine these issues and take action", Waters wrote in an official statement after the announcement of Libra.
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 told AFP. Calibra's website says it's "a connected wallet for a connected world", while Libra's site claims it'll "reinvent money" and "transform the global economy" so "people everywhere can live better lives".
"Facebook is also spending US$3 billion dollars this year just to sharpen its security and to assure us that we can trust them with our data", Swartz said.
Libra will be different, Facebook says, in part because its value will be pegged to a basket of established currencies such as the USA dollar, the euro, the yen and others.