Mark Kavanagh, Tech Journalist, on Facebook Launching its own Currency

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Facebook plans to launch a new cryptocurrency next year as part of its wider efforts to expand beyond social networking into e-commerce and global payments.

Facebook said it has linked with 28 partners to form Libra Association, a Geneva-based entity governing the new digital Libra coin, which it said will launch in the first half of 2020.

The US tech giant has also created Calibra, a subsidiary which will offer digital wallets connected to messaging platforms Messenger and WhatsApp to save, send and spend Libra, which will be backed by government-backed assets.

Facebook is betting it can squeeze revenue out of its messaging services through transactions and payments, something already happening on Chinese social apps like WeChat.

“Combining transaction data from the Calibra app with the social data that Facebook and WhatsApp and Instagram has, that’s where the treasure trove is,” said digital finance economist Teunis Brosens.

However, consumer privacy concerns or regulatory barriers may present significant hurdles for Facebook, whose services already boast more than a billion users.

“Given its history of managing our data, it shouldn’t take much to convince people that Facebook managing our money is probably a terrible idea,” said Neil Campling of Mirabaud Securities.

Banks

Calibra will conduct compliance checks on customers who want to use Libra, using verification and anti-fraud processes that are common among banks, Facebook said.

Transactions will cost individuals less than merchants, Facebook said, though executives declined to provide specifics.

Sri Shivananda, Paypal’s chief technology officer, said the project was still in its “very, very early days”.

 

Mark Kavanagh

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