Project Libra: Facebook’s very own cryptocurrency
Facebook will offer retailers attractive incentives if they accept Libra as a form of payment. Libra is expected to be tied to lots of different currencies rather than just the US Dollar to maintain stability.
Facebook bans cryptocurrency advertisements. However, it welcomes the idea of dealing with digital currencies. Facebook has been long-rumoured to enter the cryptocurrency business and it just got a huge financial boost.
Facebook set up a new financial technology in Switzerland called Libra Networks on May 2 that will focus on blockchain and payments, as well as data analytics and investment.
Why has Facebook entered the complex world of cryptocurrencies when its reputation has taken repeated blows? Well, Facebook hoped that it would regain public trust by ceding control to outside backers. In recent months, it courted multiple financial institutions in order to join an independent foundation that will not just contribute but also govern the project. So far, Facebook is on schedule.
Roughly a year ago, this project got a head start after David Marcus, former president of PayPal, agreed to take charge. In early 2019, Facebook took in the entire team previously employed by a blockchain startup Chainspace.
According to information on LinkedIn, reports show that there are over 100 people working on the project. In the Facebook careers website, there are at least 40 openings for this unit.
The Wall Street Journal reported that Facebook secured the backing of over a dozen companies including Visa, PayPal, and Uber. Together, an association will be formed in which each organisation has invested roughly $10 million as licensing fees to fund Project Libra. WSJ said that these companies may be involved to benefit from the popularity that its Facebook’s active user base can provide.
A stable cryptocurrency?
This digital currency is expected to function as a stablecoin -- cryptocurrencies designed to minimize the volatility of the price of the stablecoin. This means it will compete with government-issued currencies in order to limit the volatility typically associated with cryptocurrencies like Bitcoin.
The social network is planning to attract merchants with high bonuses. This digital token is expected to launch on June 18 and designed to function as a borderless currency without transaction fees. The Information reported that, “The digital token will be aggressively marketed in developing nations where government-backed currencies are more volatile.”
With over two billion users, a significant percentage is from regions where cross-border remittance payments are often exorbitant. Facebook’s cryptocurrency will be transferable with zero fees using Facebook products such as Messenger and WhatsApp. With this combination, project Libra appears to be a powerful alternative to traditional methods of payment.