Facebook Unveils Libra Cryptocurrency to Disrupt Global Payments
Facebook introduces Libra, a low-fee digital currency backed by a coalition of major corporations, designed to make sending money and buying goods seamless. The project aims to boost financial inclusion while ultimately driving more commerce to Facebook's advertising business.
Facebook officially reveals Libra, a new cryptocurrency that allows users to buy items and send money with almost zero fees. People pseudonymously purchase or cash out the digital currency through local exchange points like grocery stores, spending it via third-party wallet apps or Facebook's own Calibra wallet built directly into WhatsApp, Messenger, and Facebook's main app. The company releases a white paper and a testnet to test the blockchain system ahead of a planned public launch in the first half of 2020.
Rather than maintaining sole control, Facebook holds just one vote in the Libra Association alongside founding members like Visa, Uber, and Andreessen Horowitz, each of which invests at least $10 million. This consortium governs the open-sourced Libra Blockchain and its Move programming language, while also recruiting businesses to accept Libra and offer customer rewards. To protect user privacy, Facebook creates a separate subsidiary called Calibra that strictly separates Libra payment data from Facebook social data, ensuring transactions cannot be used for ad targeting.
Despite the privacy and decentralization features, Facebook and other association members earn interest on the reserve funds that users cash in to keep Libra's value stable. The company views the cryptocurrency as both an opportunity and a defensive move against potential disruption from digital coins. Facebook's vice president of blockchain, David Marcus, explains that the long-term strategy involves using Libra to increase overall commerce, which subsequently drives small businesses to purchase more ads on the social network.