Payments companies Visa, Mastercard, and Paypal, as well as Uber Technologies, Stripe Inc., and Booking.com are among backers of the venture. According to the Wall Street Journal, more than 12 backers will invest around $10m each into an organisational consortium that will govern the currency, codenamed Libra.
Sources told the Journal that the funding will go to the development of the coin, which will be aligned with a basket of fiat government currencies in an effort to avoid the wild swings in value that Bitcoin has experienced. Facebook was said to be raising as much as $1bn in total to fund the new coin.
Neither Facebook nor the individual members of what will be known as the Libra Association, will have direct control over the currency, though some of the members could function as nodes in the verification and record-keeping system. As yet, there is no clear view of what the currency will look like or what Association members’ responsibilities will be.
According to TechCrunch, the coin will be unveiled on the 18th June, with the full rollout slated for 2020, though the website notes that regulatory hurdles could see that date move.
Though cryptocurrencies have created more and more headlines since the creation of the original blockchain in 2008, they have yet to gain widespread use among consumers. Facebook’s sheer reach across different elements of the internet in messaging, social networking, and advertising suggests there’s an argument to say that might change.
Finance is hard, however, especially in comparison to the extremely new industry in which Facebook found massive popularity amid regulatory sloth. Regulations around the world vary and the route to market is difficult. There is concern from some quarters that such a coin could, as with other cryptocurrencies, be used for criminal purposes, money laundering.
The Financial Times, reporting on Facebook’s hire of a senior British bank lobbyist to navigate the coming scrutiny, expects the project to allow users to be able to send payments through its Facebook, Instagram, and WhatsApp platforms, as well as through its part in the plumbing of the wider internet. The FT also reported that Facebook had met with the Governor of the Bank of England, the UK’s central bank, to talk about the risks and opportunities of such a currency.
If Facebook can pull this off, its targets are not only rich countries with extensive infrastructure. The Information, in an in-depth report, suggested that Facebook could be targeting countries with volatile currencies. It also reported that the company is thinking about ATM-style physical terminals for conversion of physical money into the currency.
If Facebook’s multi-billion user base can propel the currency into the mainstream, it makes sense that other companies – especially Visa and Mastercard with their major payment interests – don’t want to miss out on the action. Though the consortium spreads the payoff, if successful, it also spreads the risk.
Sources told the Journal that Facebook plans to unveil the coin in a white paper, a neat echo of the original Bitcoin whitepaper, released in October of 2008.
Sourced from the Wall Street Journal, TechCrunch, FT, The Information, Bitcoin.org