Here’s all you need to know about Facebook's new cryptocurrency
Social media giant Facebook is expected to reveal its cryptocurrency Libra on Tuesday. The company will release a white paper, explaining the basics of the cryptocurrency, according to TechCrunch reports.
It will be launched officially by the first quarter of 2020.
Picture credit: The Block
Here's all you need to know.
- The cryptocurrency, codenamed Libra, will be administered by financial organisations like Mastercard and Visa, and others like PayPal, Uber, eBay and Spotify, reported The Verge. These companies will form an independent consortium called Libra Association and invest around $10 million.
- Facebook has been working on the cryptocurrency project for a year. It is expected to cost $1 billion, reported The Guardian.
- With more than two billion users across its platforms, which include WhatsApp and Instagram, Facebook could have the clout to bring cryptocurrency out of the fringes and emulate the likes of WeChat in China, where the US site is banned. WeChat allows its users to chat, shop, and play games without leaving its platform, generating more revenue by offering a one-stop portal, reported PTI.
- The Wall Street Journal speculates that major financial organisations like Visa and Mastercard are hoping to benefit from the popularity among Facebook's user base and gain insights on the company's ambitions in the payments sector.
- Unlike other cryptocurrencies, Libra will be a ‘stablecoin’ aimed at preventing complications due to price fluctuations while carrying out transactions. Hence, it will be pegged to a basket of currencies rather than a single one like the US dollar, according to TechCrunch.
- It is also reported that Facebook has formed a subsidiary called Calibra to oversee the company’s efforts in cryptocurrency.
- The Block has reported that dozens of firms not previously known are now involved, including investors such as Andreessen Horowitz and Union Square Ventures, cryptocurrency exchange Coinbase, and non-profits including Mercy Corps.
- Facebook Founder Mark Zuckerberg earlier met Mr Carney, the Governor of Bank of England, to discuss the opportunities and risks involved in launching a cryptocurrency.
- On May 2, Facebook registered a new financial technologies company named Libra Networks in Geneva, Switzerland, reported The Reuters. Geneva’s commercial register shows the company will focus on blockchain and payments as well as data analytics and investing.
- Facebook employees working on the project can choose to be paid in the cryptocurrency token instead of cash, reported The Information in an exclusive. Other than that, the project will be more aggressively marketed in the developing markets.
- The company will not charge any transfer fees via its products, including Messenger and WhatsApp, reported the TechCrunch
- Once launched, the cryptocurrency will facilitate easier remittance of earnings to families in the home country from migrant workers abroad, reported the TechCrunch
- The company is likely to face regulatory issues due to poor record on data privacy, reported The Guardian.