Facebook is leaping into the world of cryptocurrency with its own digital money, designed to let people save, send or spend money as easily as firing off text messages.
An eponymous non-profit association based in Geneva will oversee the blockchain-based Libra, maintaining a real-world asset reserve to keep its value stable. The initiative has the potential to allow more than a billion “unbanked” people around the world access to online commerce and financial services, said Libra Association head of policy and communications Dante Disparte.
“If you give people access to money and opportunity at the lowest cost, the way the internet itself did in the past with information, you can create a lot more stability than we have had up until now,” Disparte said. Libra Association debuted with 28 members including Mastercard, Visa, Stripe, Kiva, PayPal, Lyft, Uber and Women’s World Banking.
“Sending money to your friend shouldn’t be harder than getting them an Uber ride home,” said Uber head of payments and risk Peter Hazlehurst. “Libra has the potential to bridge the gap between traditional financial networks and new digital currency technology, while reducing the costs for everyone.” Facebook will be just one voice among many in the association, but is separately building a digital wallet called Calibra.
“We view this as a complement to Facebook’s mission to connect people wherever they are; that includes allowing them to exchange value,” Calibra VP of operations Tomer Barel said. “Many people who use Facebook are in countries where there are barriers to banking or credit.” Calibra is being built into Facebook’s Messenger and WhatsApp with a goal of letting users send Libra as easily as they might fire off a text message.
Libra learned from the many other cryptocurrencies that have preceded it such as bitcoin and is designed to avoid the roller-coaster valuations that have attracted speculation and caused ruin. Real-world currency used to buy Libra will go into a reserve backing the digital money, the value of which will mirror stable currencies such as the US dollar and the euro, according to its creators. “It is backed by a reserve of assets that ensures utility and low volatility,” Tomer said. For the digital currency to operate on a global scale, Libra is relying on a platform of blockchain technology that uses about 100 trusted computer “nodes” to validate and register transactions.