Just when you thought it couldn't spread into any more areas of your life, Facebook is jumping into the cryptocurrency market this month with its own offering, through a project currently called Libra. Initially, the currency was supposed to begin testing in late 2019 and launch in 2020. But a new report suggests that the company is in fact working toward an earlier launch date.
Last month Facebook acquired, “Libra Networks, with Facebook Global Holdings as stakeholder...to provide financial and technology services and develop related hardware and software,” according to a Reuters report.
Cryptocurrencies have risen in popularity over the last 10 years with the most widely known being Bitcoin. The digital currency (often referred to in terms of tokens or coins) functions completely online in secure databases that generally operate via blockchain, a secure transactions ledger that is said to be unhackable. Depending on the number of people using the currency, trading it back and forth for goods or investments, it can gain or lose value just like U.S. dollars, euros, etc.
In Facebook’s case, in addition to giving its own employees the option to be paid in the new Libra tokens, companies using Facebook Marketplace will receive sign-on bonuses for using the new currency, and new shopping features recently added to Instagram and Whatsapp will also be able to use the digital tokens, dovetailing Libra with Facebook’s overall expansion into e-commerce.
In addition, “developing nations where government-backed currencies are more volatile,” aree part of the company’s target market, The Information reported. Many of these countries are already heavy users of Facebook’s WhatsApp and Messenger, where users will also be able to use the cryptocurrency for mobile payments and potentially access in-person ATMs.
To ward off user concerns about data misuse, given Facebook’s past and ongoing privacy failures, the company announced that the currency will be governed by an independent foundation. Details of what the foundation will be and who will be involved remain unclear, though The Block reports that, “Facebook plans to license out the right to operate nodes on its new cryptocurrency network, charging companies $10 million apiece for the privilege.” Each of those companies will be allowed to have a representative at the foundation, and Facebook hopes to have 100 of these nodes, generating $1 billion in licensing fees.
Cryptocurrencies, even the ones that have been around for awhile like Bitcoin and Ethereum, are notoriously volatile, skyrocketing and cratering in value or disappearing altogether. However, despite all the uncertainty surrounding them, that has done nothing to stem the launches of new currencies every year. What has crypto-watchers on their toes however is that if and when Facebook launches its currency, it’s user base of over 2.3 billion people could render it the biggest cryptocurrency in the world if it catches on.
For this reason, Facebook has yet again attracted the attention of lawmakers who are wary of the company’s intentions and ability to manage a whole currency market given its history of mishandling users’ private financial information. Nothing has come of this inquiry just yet as project Libra is still by and large under wraps. However the government is working to catch up with the pace of coin offerings as the digital currency market continues to expand, putting regulations in place to ideally protect consumers from theft, fraud, and abuse.