Tuesday, June 18, 2019 / 12:15 PM / By Mike Isaac and Nathaniel
Popper of The New York Times / Header Image Credit: CoinCodex
Facebook has unveiled its ambitious and hotly anticipated plan to create an alternative financial system built on a cryptocurrency named Libra, Mike Isaac and Nathaniel Popper of the NYT write.
• As with Bitcoin, software developers would be able to build digital wallets and other services on top of Libra.
• Unlike Bitcoin, it would be directly backed by government currencies like the dollar or euro, so it wouldn’t fluctuate wildly in value.
• To acquire Libra digital tokens, which would be dispensed through a new Facebook subsidiary called Calibra, people would probably have to show government identification. That would make it unappealing for illegal activity.
• Initially, Libra would be used for payments — but in the future, it could be used for lending and investing. (Read more about how Libra could work.) Facebook hopes it will go live next year.
• The currency would be controlled by an independent nonprofit entity in Switzerland overseen by other companies.
• So far, Facebook has 27 partners, including Visa, Spotify, eBay and PayPal. That’s expected to rise to 100 next year. Each partner will be expected to invest at least $10 million.
“It would be the most far-reaching attempt by a mainstream company to jump into the world of cryptocurrencies,” Mr. Isaac and Mr. Popper write. The company hopes that Libra “could become the foundation for a new financial system not controlled by today’s power brokers on Wall Street or central banks.”
But it faces plenty of skepticism “from people who question the usefulness of cryptocurrencies and others who are wary of the power already accumulated by the social media company.” One big issue: Facebook will have to overcome concerns about the data privacy of its users. (Facebook says Calibra would not be allowed to share financial customer data with other Facebook divisions.)
Expect governments to pay close attention. “Financial regulators in the United States and other countries could stop Libra before it is even released,” Mr. Isaac and Mr. Popper write, given their worries about its potential use in crime or its ability to amplify Facebook’s power. Politico has more on what that could look like.
Download PDF Here – An Introduction to Libra’s Mission