Coverage: Facebook lifts veil on cryptocurrency Libra
Facebook has unveiled its own cryptocurrency, Libra, which the company hopes would boost e-commerce and advertising on its platforms.
AP’s Rachel Lerman has the news, noting Facebook is currently under investigation:
Facebook already rules daily communication for more than two billion people around the world. Now it wants its own currency, too.
The social network unveiled an ambitious plan Tuesday to create a new digital currency similar to Bitcoin for global use, one that could drive more e-commerce on its services and boost ads on its platforms.
But the effort, which Facebook is launching with partners including PayPal, Uber, Spotify, Visa and Mastercard, could also complicate matters for the beleaguered social network. Facebook is currently under federal investigation over its privacy practices, and along with other technology giants also faces a new antitrust probe in Congress .
Josh Constine from TechCrunch highlighted all you need to know about the new product:
You’ll pseudonymously buy or cash out your Libra online or at local exchange points like grocery stores, and spend it using interoperable third-party wallet apps or Facebook’s own Calibra wallet that will be built into WhatsApp, Messenger, and its own app. Today Facebook released its white paper explaining Libra and its testnet for working out the kinks of its blockchain system before a public launch in the first half of 2020.
Facebook won’t fully control Libra, but instead get just a single vote in its governance like other founding members of the Libra Association including Visa, Uber, and Andreessen Horowitz who’ve invested at least $10 million each into the project’s operations. The association will promote the open-sourced Libra blockchain and developer platform with its own Move programming language plus sign up businesses to accept Libra for payment and even give customers discounts or rewards.
Bloomberg’s Lionel Laurent warned the new crypto could give rise to even more concern from regulators and users alike:
Regulators will be watching closely when Facebook Inc. unveils its cryptocurrency project this week. Their vigilance is warranted.
Mark Zuckerberg, the social network’s founder, isn’t going to gamble with what remains of his public image by replicating the worst excesses of the Bitcoin craze. He’s not trying to create a speculative currency; a potential wave of mom-and-pop investment losses is the last thing he needs. He just wants a digital medium of exchange for use on his apps. Nevertheless, his bid to launch an online payments revolution carries plenty of risks, from antitrust concerns to the threat that it might pose to financial stability.
It’s crucial that Libra doesn’t become a protective glue that binds Zuckerberg’s social networks even more closely together at a time when many regulators want to break them up. Libra will be presented as an open-source partnership whose benefits are available to all, but to what extent will it really be held at arm’s length from the Zuckerberg empire? Indeed, if the financial and business benefits of using Libra accrue mainly to Facebook, it will merely enshrine its market dominance.