On Tuesday, Facebook announced that in the first half of 2020, it will roll out Libra, a cryptocurrency built on blockchain allowing people to safely make purchases and send money, without needing a bank account.
Libra is a cryptocurrency created to be sent instantly across the world. The currency will be managed by a Switzerland-based association made up of Facebook and the other partner organizations. These companies will have invested at least $10 million in the foundation - essentially forming its initial cash reserves.
Is it a cryptocurrency? Calibra will basically be a digital wallet that will use the Libra currency. But in practice, it sounds a bit like a more high-tech version of PayPal.
Or maybe when Facebook goes under the microscope by the FTC in the coming year, as it is expected to do, the government could just say, "Hey, we don't think you need to be in the cryptocurrency business too". The language is tuned for creating custom transactions and smart contracts.
Facebook argues that a users' identity and Facebook data will not be mingled with any Libra payments.
The antisocial network's blockchain-tracked currency, Libra, will reside in a digital wallet named for the company's newly formed financial services subsidiary Calibra.
Of course, Facebook's massive audience - in addition to the audiences of other partners like eBay - will ensure Libra gets exposure from the off.
Though there were no banks among the inaugural members, there had been discussions with lenders who were waiting to see how regulators and consumers responded to the project before deciding whether to join, Jorn Lambert, executive vice president for digital solutions at Mastercard, said.
According to the association, more than 1.7 billion people around the world do not belong to a financial institution and have difficulty accessing money.
Breitbart pointed out that in contrast, bitcoin's decentralized system means that no governing body can choose to increase or decrease the supply of the currency.
Given the on-going privacy concerns surrounding Facebook, having other companies backing the project may help alleviate users' and regulators' distrust in the currency, something David Marcus, co-creator of Libra, noted when making the announcement.
Facebook has data on billions of people and has repeatedly shown a disregard for the protection and careful use of this data. He then asked the Group of Seven central bank governors to prepare a report on the Libra evaluating its risks around privacy, money laundering and terrorism finance for their next meeting in July.
Per an official statement from Maxine Waters, chairwoman of the House of Representatives' Financial Services Committee, and a letter to Walters from fellow committee member and representative Patrick McHenry, it appears that some key American lawmakers take a dim view of Libra - and cryptocurrencies in general.
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