Facebook Inc is leaping into the world of cryptocurrency with its own digital money, designed to let people save, send or spend money as easily as firing off text messages.
“Libra” — described as “a new global currency” — was unveiled yesterday in a new initiative in payments for the world’s biggest social network with the potential to bring cryptomoney out of the shadows and into the mainstream.
Facebook and about two dozen partners released a prototype of Libra as an open source code to be used by developers interested in weaving it into apps, services or businesses ahead of a rollout as global digital money next year.
An eponymous nonprofit association based in Geneva is to oversee the blockchain-based Libra, maintaining a real-world asset reserve to keep its value stable.
The initiative has the potential to allow more than a billion “unbanked” people around the world access to online commerce and financial services, Libra Association head of policy and communications Dante Disparte said.
“We believe if you give people access to money and opportunity at the lowest cost, the way the Internet itself did in the past with information, you can create a lot more stability than we have had up until now,” Disparte said.
Libra Association debuted with 28 members — including Mastercard Inc, Visa Inc, Stripe Inc, Kiva Inc, PayPal Holdings Inc, Lyft Inc, Uber Technologies Inc and Women’s World Banking.
Facebook will be just one voice among many in the association, but is separately building a digital wallet called Calibra.
“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. “Many people who use Facebook are in countries where there are barriers to banking or credit,” he said.
Calibra is being built into Facebook’s Messenger and WhatsApp with a goal of letting users send Libra as easily as they might fire off a text message.
For the digital currency to operate on a global scale, Libra is relying on a platform of blockchain technology that uses about 100 trusted computer “nodes” to validate and register transactions.
The Libra Association will be the only entity able to “mint or burn” the digital currency, maintaining supply in tune with demand and assets in reserve, Barel said.
“It is not about trusting Facebook; it is effectively trust in the association’s founding organizations that this is independent and democratic,” Disparte said.
The new Calibra digital wallet promises to eventually give Facebook opportunities to build financial services into its offerings, expand its own commerce and let more small businesses buy ads at the social network.
“We certainly see long-term value for Facebook,” Barel said.
Financial information at Calibra will be kept strictly separate from social data at Facebook and will not be used to target ads, Calibra vice president of product Kevin Weil said.
Libra will be a regulated currency, subject to local laws in markets regarding fraud, guarding against money laundering and more, Weil said.
“If you look at the state of people using money to do bad things, most of it happens in cash,” Weil said.
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