Facebook has officially announced details of its cryptocurrency, which it’s calling Libra.
The idea, like with pretty much every other cryptocurrency ever, is that it can be used to buy and sell products or services without having to rely on a credit card or bank account. It’s a huge step for blockchain visibility — not for any technological reason, but because Facebook is by far the biggest online network of people in the world, which means it can strongarm them into jumping on board.
As part of the announcement, Facebook wants to “enable a simple global currency and financial infrastructure that empowers billions of people,” according to its white paper. Also has launched a test version of its blockchain, the technology upon which cryptocurrencies like bitcoin are built. It is open-source software, meaning developers can experiment with building applications on the platform and submit feedback on the code.
“Libra’s mission is to be a simple, global currency and financial infrastructure that empowers billions of people,” said Facebook’s David Marcus, who runs Calibra and headed up the Libra project. One of the aims of the project is to help the 1.7 billion people around the world who don’t have bank accounts access a stable currency and financial services.
“Aside from limited cases, Calibra will not share account information or financial data with Facebook or any third party without customer consent. This means Calibra customers’ account information and financial data will not be used to improve ad targeting on the Facebook family of products,” Facebook said in a statement posted to its website.
“The limited cases where this data may be shared reflect our need to keep people safe, comply with the law and provide basic functionality to the people who use Calibra. Calibra will use Facebook data to comply with the law, secure customers’ accounts, mitigate risk and prevent criminal activity,” Facebook continued.
The coin itself will be governed by an independent foundation, the Libra Association, consisting of representatives from Facebook, financial institutions, nonprofits, merchants, venture capitalists, and the companies running the nodes. Presently, the project has 28 founding members — companies and nonprofits from several different countries which says it will have just one equal vote—Among the founding members are heavy hitters in the tech, finance and nonprofit sectors, including Mastercard (MA), Uber (UBER), Mercy Corps and Andreesen Horowitz. These partners bring expertise in areas key to the project: international financial regulations, blockchain and the financial needs of poor communities around the world. The association will be based in Geneva and officially take up its post this week overseeing the rollout of Libra. Facebook hopes to have 100 association members by the 2020 launch.
How Libra will work
Is simple and it allows users to access Libra in a number of ways, not just through Facebook. Firstly, Facebook’s new subsidiary Calibra will build a “wallet” application for people to use Libra, send it to their friends and make purchases on Facebook and Instagram. A button on Whatsapp and Messenger will allow users to send Libra in their message threads, the same way they send GIFs or emojis. Calibra will also operate as a standalone app.
Second and lastly, other companies will be able to build similar applications. For example, a bank could build an application allowing users to take out a loan in Libra, or a retail company could plug into the network so users can make payments in the digital currency. To get Libra, users will need to transfer the money through their bank or go to a local money exchange to trade local currency for it. And for a user to spend the money their friend sent over Messenger without first depositing it back into their bank account will require, say, their favorite clothing store to accept Libra as payment, too. Though Facebook’s large user base will give the cryptocurrency broad exposure initially, the effort’s success will depend on consumers being able to do more than just use Libra on Facebook’s platforms.
The currency is set to launch in 2020.