Facebook announced plans Tuesday to launch a new cryptocurrency, called Libra, in the first half of 2020. A subsidiary, Calibra, will act as a digital wallet, allowing users to spend and receive the currency.
While the media giant is driving the project right now, it's one of 28 founding members of the independent Libra Association, which will oversee the currency. Mastercard, Visa, Spotify, Ebay, PayPal and Uber are other members, though the association hopes to reach 100 at launch. Libra is explicitly aimed at the millions of people who live outside of the financial system, but who have access to a smartphone.
Privacy scandals have rocked Facebook repeatedly in recent years, and its new digital currency may add more fuel to the fire. Even as the company attempts to expand beyond social media, lawmakers, regulators and privacy advocates have called for penalties or a forced break-up.
Though Libra users will be able to send money through Facebook Messenger and Whatsapp, a Facebook subsidiary, the company says it will keep data about financial transactions separate from data used for advertising.
This multi-function structure echoes WeChat, a Chinese app that allows users to message, video call, pay bills, order goods, transfer money, book appointments, book transportation, check crowd density and more. Critics have accused WeChat of censoring political dissent in China.
The open source currency will be built on a blockchain, a public digital database of transactions to which individual computers contribute. Users will send and receive money under pseudonyms, keeping the ledger anonymous.
Libra will be linked to a reserve of assets, like bank deposits and government securities from central banks, in contrast to volatile, unbacked cryptocurrencies like Bitcoin. The money that users keep in the reserve will generate interest for Facebook and the other Libra Association members, according to Tech Crunch.
While using and investing in cryptocurrency is high-risk and largely speculative now, Facebook and the Libra Association could bring it to the mainstream.
