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On June 18, Facebook announced a long-rumored new cryptocurrency called Libra, which the tech company hopes to introduce billions of new users into the world of digital coins and transform the way money moves around the world. The cryptocurrency will be available to users in the first half of 2020.
Libra is a consortium to create an open-source digital currency and the goal is for developers to create services for consumers to send money around the world easily and for free, doing some with the ease of sending a photo or a message, according to CNBC.
Facebook’s announcement is a major step in legitimizing the use of cryptocurrencies and blockchain technology.
“Libra is a major validation of cryptocurrencies and blockchain technology to be the financial infrastructure of the future,” Garrick Hileman, head of research at Blockchain, told CNBC. Libra, “could be one of the most significant and positive events in cryptocurrencies’ history as billions of Facebook users could join the ecosystem we’ve been building over the last decade.”
While ease and movement are being championed, several concerns are arising given Facebook’s questionable past with trust and privacy and how it could impact the new currency.
But the Libra currency won’t be run by Facebook. Instead, it will be run by a nonprofit association he Libra Association, based in Geneva, Switzerland, which will be supported by a range of companies and organizations. Its goal is to be broadly accessible, relatively stable and secure, unlike some less stable cryptocurrency, which can be hugely volatile and speculative. Libra will be backed by government-backed money.
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But Facebook does plan to profit from it with a new subsidiary called Calibra, which is building a digital wallet to store and exchange currency.
Facebook says that the financial information stored in the digital wallet will not be used for ad targeting on Facebook, promising the two divisions will be kept totally separate.
David Marcus, the leader of Facebook’s Calibra division, “We’ve seen internet change the game for everything that could be digitized, except for money.”
Prior to Calibra, Marcus ran Facebook’s Messenger division and was previously president of PayPal.
“The numbers really speak for themselves. There’s 1.7 billion people around the world that are unbanked, the same number are underserved by financial services,” said Marcus. “Now, anyone with a cheap smartphone has access to all the info they want in the world for free with a basic data plan. Why doesn’t money work the same way?”
Marcus also acknowledged Facebook’s trust and privacy issues and why it’s important for Facebook to not actually be in control of the currency.
“It may sound super controversial but there’s no better way to demonstrate the evolution of our thinking, what we know we should control and what we should not and can not control,” Marcus said. “A network that enables billions of people to move money around the world should not be something we can or should control.”
Facebook also has announced that it has partners that will help merchants accept Libra include payments companies Visa, Stripe, PayPal and Latin American payments platform Mercado Pago.
Additionally, tech companies eBay, Lyft, Uber, Spotify, and Mercado Pago are on board.