Social media giant Facebook has launched a digital crytocurrency called Libra that will facilitate the buying, selling and transfer of money across the globe at nearly zero fees.
With close to 2.4 billion monthly Facebook users, Facebook hope to connect people who do not have access to traditional banking platforms.
Users of Libra will be able to buy or cash out their Libra online or at local exchange points or perform transactions using third-party wallets. Facebook also has its own standalone wallet called Calibre, which it plans to integrate into WhatsApp and Messenger.
"Today we're sharing plans for Calibra, a newly formed Facebook subsidiary whose goal is to provide financial services that will let people access and participate in the Libra network," Facebook said. "The first product Calibra will introduce is a digital wallet for Libra, a new global currency powered by blockchain technology. The wallet will be available in Messenger, WhatsApp and as a standalone app - and we expect to launch in 2020."
According to a World Bank global index data, most people around the world don't have access to even basic financial services. The report says that almost half of the adults around the world don't have an active bank account with the figures worse in developing countries, and even worse for women.
With roughly 70% of small businesses in developing countries lacking access to credit systems and migrants losing $25 billion yearly through remittance fees, Facebook hopes to proofer a solution that would help people to save, send and spend money.
Facebook says Calibra is very easy to use and as simple as sending a text message on your phone. The social giant also said that it plans to expand and offer additional services for people and business.
"Calibra will let you send Libra to almost anyone with a smartphone, as easily and instantly as you might send text message and at low to no cost. And, in time, we hope to offer additional services for people and businesses, like paying bills with the push of a button, buying a cup of coffee with the scan of a code or riding your local transit without to carry cash or a metro pass," Facebook said.
Though Facebook says that Libra will connect millions of people who do not have access to traditional banking platforms, facilitate payments, savings and all sort of financial transactions, people are however, skeptical of the whole thing regarding its multiple privacy violations in the past.
Facebook risks a $5bn fine from the US Federal Trade Commission (FTC) following the Cambridge Analytica scandal which affected millions of Facebook users. Facebook's dive into the crypto world is already attracting scrutiny from financial regulators and privacy advocates around the world.
In terms of privacy and security, Facebook promises that Calibra will have strong protections to keep users money and information safe when launched. It said that there will be systems to monitor users activity to detect and prevent fraud.
"When it launches, Calibra will have strong protections in place to keep your money and your information safe," Facebook said. "We'll be using all the same verification and anti-fraud process that banks and credit card use, and we'll have automated systems that will proactively monitor activity to detect and prevent fraudulent behavior. We'll also offer dedicated live support to help if you lose your phone or your password - and if someone fraudulently gains access to your account and you lose some Libra as a result, we'll offer you a refund."
Aside from the above, Facebook says Calibra will not share account information of financial data with Facebook or any third-party without customer consent nor will the data be used to improve ad targeting on Facebook or its family of products.
Libra cryptocurrency was built on the foundation of a blockchain (the Libra Blockchain) and is tied to a mix of global assets to prevent the level of volatility commonly seen in the likes of Bitcoin and other cryptocurrencies.
Although Facebook created the crypptocurrency, decisions making will be carried out by the Libra Association, which is a collection of financial firmss, not-for-profit companies, and commerce firms. Each of these companies contributed a minimum of $10 million to join the new Facebook subsidiary, giving Facebook over $1 billion to build the new cryptocurrency.
Here are the 28 founding members of the Libra Association and their industries as reported by the The Block'Crypto:
- Payments: Mastercard, Paypal, PayU, Stripe, Visa
- E-commerce: Fartfetch, eBay, Mercado Libre,
- Travel: Booking Holding
- Music: Spotify
- Ride-Share: Uber, Lyft
- Social Media: Facebook, Calibra
- Telecommunications: Iliad, Vodafone Group
- Blockchain: Archorage, Bison Trails, Coinbase, Inc., Xapo Holdings Limited
- Venture capital: Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital, Union Square Ventures
- Nonprofit: Kiva, Mercy Corps, Women's World Banking
The foundation will be headquartered in Geneva. Facebooks notes the Libra Association will be independent from government and itself, as it hopes to have 100 members in the governing association before it launches.
Bitcoin, Cryptocurrency, Facebook's Cryptocurrency, Crypto wallter,virtual currency and money.