In May 2018, reports started circulating that Facebook was developing its own blockchain for digital payments. Now the tech giant has confirmed that Libra (or Globalcoin, as it's being called elsewhere) will be available to users on platforms such as WhatsApp, Instagram and Facebook Messenger.
Who’s involved in the Facebook cryptocurrency project?
Libra will be overseen by a group of companies that have reportedly each invested 10 million USD to join the Libra Association, an independent consortium that allows partners to manage their own node on the blockchain network.
According to The Block, some of these partners include the likes of Visa, Mastercard, PayPal, Uber, Coinbase and Kiva.
How will Facebook's Libra be used?
Libra is expected to be a stablecoin that will be used on Facebook’s various messaging platforms. Facebook's cryptocurrency will be transferrable with zero fees between apps like Whatsapp and Messenger.
Reports suggest Facebook could create with Libra a new digital marketplace that enables direct payments between consumers and retailers, potentially cutting out intermediaries like credit card companies. Facebook could also allow users to transfer payments across borders without needing to pay hefty international banking fees.
Most importantly, Facebook’s cryptocurrency could in theory disrupt traditional finance as users achieve all their payment needs online. Some observers predict that the cryptocurrency will be most powerful in developing countries, which is where Facebook intends to market the product.
How will Facebook's Libra differ from other cryptocurrencies?
Unlike most cryptocurrencies, Facebook’s stablecoin will be pegged to a number of government-issued currencies in an effort to avoid value fluctuations.
Critics are wary that a global cryptocurrency could be “the last stone in Facebook’s Infinity Gauntlet”. Cryptocurrencies are typically seen as an alternative to traditional payments, but the inclusion of Visa and Mastercard indicates that Facebook is focused far more on mass adoption than the libertarian spirit that characterizes much of the cryptocurrency industry.
Unanswered questions
Some analysts suggest that Facebook may even pay its users interest payments for holding the currency. Caitlin Long argues that if Facebook doesn’t share its profit from interest earned on the assets backing the cryptocurrency, it will face yet more criticism.
Facebook must also content with regulatory uncertainty. For one thing, any user who uses the cryptocurrency will most likely have to go through KYC processes, which could shed light on how many of Facebook's 2.4 billion accounts are real accounts. Furthermore, no-one knows yet whether this new cryptocurrency will be classified a security, which would present additional hurdles for user adoption.
Conclusion
Project Libra could well accelerate the pace of adoption for all cryptocurrencies, particularly Bitcoin. A digital Facebook Marketplace could usher in a new era of accessible financial services, especially in countries where traditional banking has failed.
Libra will be fully unveiled on June 18, according to TechCrunch, with a full release in 2020.
Facebook is, of course, not the only major social platform getting into the cryptocurrency space. Telegram will soon launch its own Telegram Open Network, with the first public sale of Gram tokens happening right here on Liquid.
Are you looking forward to seeing what the likes of Facebook and Telegram can deliver?
