Facebook’s 2.4 billion users will soon be able to use a digital coin called Libra to make everyday purchases, the social network has revealed.
After much speculation, Facebook has finally confirmed plans to launch its own cryptocurrency, with Libra expected to debut in the first half of 2020.
Users, including non-banking consumers, will be able to send money, purchase products from retailers and even sell their own products on its platform using Libra instead of their local currency.
Like Bitcoin, the best-known virtual currency, Libra does not link accounts on the network to a real-world identity.
In Facebook’s view, the new blockchain-based currency could challenge bitcoin because of its permissioned system, meaning only a small list of approved companies and organisations will be able to process transactions.
Unlike Bitcoin, Facebook also says running Libra won’t waste tremendous amounts of computational power.
Calibra will be the digital wallet for Libra which will enable users to send and receive Libra currency. It will be integrated into WhatsApp and Messenger, allowing users of those apps to save, send and spend Libras.
Signing up for Calibra will require KYC (know your customer) verification, meaning that users will have to upload some sort of government-issued ID before they can start using the service.
Several companies like Visa, MasterCard, PayPal and Uber have reportedly already joined the so-called Libra Association governing its cryptocurrency project.
While Facebook has big aspirations for Libra, consumer privacy concerns or regulatory barriers may present significant hurdles.
David Marcus, a former PayPal executive who heads the project for Facebook, said Facebook’s goal is to give people without a bank account access to currency.
“Libra’s mission is to be a simple, global currency and financial infrastructure that empowers billions of people,” Mr Marcus said.
He said the name “Libra” was inspired by Roman weight measurements, the astrological sign for justice and the French word for freedom.
“Freedom, justice and money, which is exactly what we’re trying to do here,” Mr Marcus said.
Facebook appears to be betting it can squeeze revenue out of its messaging services through transactions and payments, something already happening on Chinese social apps like WeChat.
Facebook, whose shares gained 0.3 per cent, faces a public backlash over a series of scandals, and its new venture may face opposition from privacy advocates, consumer groups, regulators and lawmakers across the world.
Some have called for Facebook to incur penalties, or be forcibly broken up, for mishandling user data, and not preventing Russian interference in the 2016 US presidential election through a social media disinformation campaign.
French Finance Minister Bruno Le Maire was among those concerned about the move by Facebook, and said he had asked the heads of the central banks of G7 countries to write a report on the issue by mid-July.
“This instrument for transactions will allow Facebook to collect millions and millions of data, which strengthens my conviction that there is a need to regulate the digital giants,” he said in an interview on Europe 1 radio.
Facebook has engaged with regulators in the United States and abroad about the planned cryptocurrency, company executives said. They would not specify which regulators.