Facebook wants to own your money, too – Libra cryptocurrency and digital wallets explained
Facebook has today unveiled a first look at Libra, its attempt to disrupt the way consumers share and spend money over the internet.
The announcement includes four major parts:
- the Libra blockchain: Facebook’s prototype for a new scalable blockchain
- Libra: a cryptocurrency backed by corporation-contributed reserves
- Move: a new programming language prioritising safety, and
- the Libra Association, a not-for-profit, Geneva-based association to govern the Libra currency.
According to David Marcus, cofounder of Libra and former president of PayPal, the international exchange of currency is one of the last digitisable mediums yet to be disrupted by the internet. “If you stopped anyone on the streets of San Francisco or New York city… and asked them to send $5 to Canada, they wouldn’t know where to start,” Marcus wrote in a Facebook blog.
Facebook is touting the Libra cryptocurrency – to be launched by mid-2020 – as more stable than other than other cryptocurrencies as it’s backed by a reserve of real assets. These assets have, so far, been contributed by a collection of 28 founding companies and organisations – including Facebook, eBay/PayPal, Visa, Mastercard, Uber, Spotify and Vodafone – to form the Libra Association.
According to Facebook, “Libra is built on a secure, scalable and reliable blockchain and is designed to help bring people everywhere equal access to financial services.”
The Libra Association NFP will be tasked with managing and governing the distribution of Libra, with each of the Libra Association’s founding members having paid a minimum of US$10 (AU$14.5) million to join.
Facebook says it hopes to grow the Libra Association to 100 members by the currency’s launch next year – which would mean a collective pool of at least US$1 (AU$1.5) billion behind Libra at launch. Founding members will also have the option to become a validator node and cast votes in Libra Association decisions.
Facebook will have a large case to prove with Libra given the company’s ongoing concerns around privacy and data. In his blogpost, Marcus acknowledges as much, “I realise that such an endeavour that started at Facebook might be met with some deserved scepticism.
“But my ask is that you take the time to truly make an opinion for yourselves by looking into how the Libra network and its governance have been setup from the ground up. By the time Libra becomes available in 2020, Facebook will have no special rights, and will be one member among many of the Libra Association.”
In addition to the founding infrastructure of the Libra cryptocurrency, Facebook is also announcing a new subsidiary, Calibra – a ‘digital wallet’ within the Facebook family of apps for users to send, spend and receive Libra.
Calibra will also be built into other Facebook apps including Whatsapp and Messenger, though Marcus, who is leading the Calibra initiative, stresses that users will have “many wallets to choose from on top of the Libra network.
“So [Calibra] will have to earn your trust to succeed, and one of the ways we will do this is ensuring your financial and social data doesn’t get commingled.”
According to Facebook, Calibra is designed with a “strong commitment” to protecting customer privacy.
“We believe that customers hold rights to their data and should have simple, understandable and accessible data-management controls.”
Calibra will not share account information or financial data with Facebook, aside from limited cases, according to the company. Calibra may, however, share aggregated data – not linked with accounts – with Facebook and third parties relating to product or service performance (eg. total active users).
According to Facebook, in the event that a user’s Facebook data may be used to personalise or improve the Calibra experience, consent will be sought first.
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