Can Facebook's Cryptocurrency Win Over Consumers?

A new subsidiary of the social media giant is aiming "to provide financial services that will let people access and participate in the Libra network".

Facebook will be just one voice among many in the association, but is separately building a digital wallet called Calibra.

Facebook has said that it expects to be fined as much as $5 billion by the Federal Trade Commission after an investigation stemming from the scandal.

As Bitcoin and blockchain advocate Caitlin Long estimated even before the official Libra announcement, Facebook will face "regulatory uncertainty" as a result of its token launch, leading to scrutiny for "many outdated financial regulations". "It is out of question" that Libra "become a sovereign currency", Le Maire said in an interview with Europe 1 radio, per Bloomberg.

"All over the world, people with less money pay more for financial services", the Libra site states, citing burdens such as steep usage fees and high-interest payday loans.

"Payments is one of the areas where we have an opportunity to make it a lot easier", Zuckerberg told Facebook's developer conference in April.

Without divulging any details about the members of Libra Association, Facebook said they include "geographically distributed and diverse" businesses and academic institutions.

Farfetch hopes by working to develop the Facebook-backed cryptocurrency, it will also help improve intellectual property protection, increase transparency throughout the supply chain and product life cycle (showing whether an item has been resold, for example) and, ultimately, enable global, frictionless e-commerce. The hope is that billions of people around the world will have access to this digital currency and basic financial services.

Before Tuesday's announcement, Facebook was already facing significant backlash over mishandling user data and not doing enough to prevent Russian interference in the 2016 USA presidential election. Unlike other cryptocurrencies, Facebook emphasized, Libra is backed by "a reserve of real assets", with an equivalent amount of real currencies and assets held in reserve for every Libra that is created.

David Marcus, a former PayPal executive who heads the project for Facebook, said the name "Libra" was inspired by Roman weight measurements, the astrological sign for justice and the French word for freedom.

Facebook has engaged with regulators in the United States and overseas about the planned cryptocurrency, company executives said.

At the same time, the ad biz appears to be committed to encouraging Libra spenders to share the data Facebook insists it won't share: "Calibra believes that control over an individual's data doesn't stop at data use and that customers should be able to use their data for their own purposes and with other services".

Calibra won't require users to have a Facebook account to make a free wallet. Instead, it is exchanged digitally between buyers and sellers using secret codes for security. That could range from Uber discounts to a Libra bonus paid when users set up a Calibra wallet, although the companies haven't laid out specifics.

Libra Blockchain begins Tuesday in an open-source test, but it's expected to be launched in 2020 alongside Calibra.

  • Zachary Reyes