Facebook’s entry into the world of cryptocurrency has been unveiled. Their digital currency, Libra, will be a global stablecoin made available mid-2020 to the billions of users of Messenger and WhatsApp; Instagram and other Facebook services will follow shortly thereafter.
Like Bitcoin and other cryptocurrencies, Facebook is planning to change how users interact with their money. The company will be going against ‘crypto fundamentals’ though, opting for a less decentralised blockchain structure, as only authorised entities will be allowed to run a node.
The token will be pegged to a pool of reserve currencies, which is similar to a stable coin except that it covers a broader range of fiat currencies. This, therefore, will be the most broadly legitimized stablecoin in crypto. Along with the token, Facebook will release a Libra Investment Token which can be purchased or distributed as dividends.
The complete list of Libra association founding members boasts some familiar and unfamiliar names. Of particular interest is Visa/Mastercard, Paypal, and Coinbase.
“A person familiar with the situation said Facebook charged some members $10 million to manage their own node, which allows members to access and view the network. Originally the company had ambitions to get Wall Street involved, but found a lack of interest among institutional giants like Goldman Sachs and JPMorgan. It is still looking to have 100 members in the governing association…” as reported by Frank Chaparro and Aislinn Keely from the Block.
To go with the digital currency, Facebook announced a digital wallet called Calibra:
Libra is far from optimal as it lacks crucial decentralization, and to many cryptocurrency enthusiasts, its shortcomings make Libra fall outside their very definition (and purpose) of cryptocurrency. The giants behind Libra, and the fear of corruption powers gaining even more authority, concerns many cryptocurrency advocates.
But having a blockchain-based currency to buy and sell products on widely adopted platforms could be attractive enough to the average Joe/Jane to help blockchain take the first step into mass adoption, and while privacy and decentralization are definitely not part of the whitepaper of Libra, Facebook’s actions may force authorities to create clearer and fairer regulations across all cryptocurrency.
While this looks like a step back for those who’ve been in the industry for a while, it will doubtlessly become the gateway into cryptocurrency for millions, if not billions, of new users.