Facebook is going to unveil Libra next week. The cryptocurrency is, surprisingly, backed by Visa and Mastercard. Also donating around $10 million each are Internet companies like PayPal, Stripe, Booking.com and Uber.
The most important thing to remember about this news is, however, not that Facebook is starting its own cryptocurrency. The main take-away here is that Libra is going to be backed by MAJOR financial firms like Visa and Mastercard. Cryptocurrencies are typically seen as alternatives to paying with cryptocurrencies, but this time, the old school is meeting the new school.
Thanks to the Verge, we know Facebook, with its increasingly skeptical regulators and users, establishing an independent body to provide cover to the insane amount of power it wields, not to mention its laissez-faire towards its security responsibilities, Libra might be just the ticket.
Libra is to see a full release in 2020, and is expected to function as a stable alternative to cryptocurrencies like Bitcoin. It will be connected to a number of government-issued currencies to limit volatility. Facebook is hoping the more stable cryptocurrency will appeal to users in developing countries, where local currencies are known for being unstable.
Partnerships, Partnerships, Partnerships
Not only will users be able to send money with Facebook and WhatsApp, Zuckerberg and co. hope that Libra will help facilitate e-commerce companies' payments by allowing users to spend online. It also seems there will be ATM-like terminals where people can turn real cash into Libra.
Regulations, Regulations, Regulations
There are, of course, a lot of regulations that Facebook will have to maneuver through and around before Libra is launched. Facebook will have to address fraud and money laundering concerns (which are seen as issues within the group investing in Libra). Set to meet with the likes of the US Treasury, Western Union and Bank of England governor Mark Carney, Facebook will be discussing the risks and opportunities of the currency.
To break into key markets like India, Facebook has a long way to go to lessen the hostile stance users have there regarding cryptocurrencies.