Facebook is launching into cryptocurrency with “Libra”, a new means of payment that should particularly benefit the billion people “excluded” from the banking system
Facebook will it fly with its 2.7 billion users with cryptocurrencies? In any case, this is his intention with “Libra”, a virtual currency meant to buy goods or send money as easily as an instant message.
As of the first half of 2020, Libra will have to offer a new means of payment outside traditional banking channels: it is the cornerstone of a whole new financial ecosystem without the barrier of different currencies, a tool likely to interest particularly the excluded of the banking system, in emerging countries for example.
Users will have on their smartphone a digital wallet, “Calibra” – directly integrated by Facebook to its services Messenger and WhatsApp – to make their purchases, send or receive money, told AFP of responsible for the project.
But Libra is an “open” system: its computer code is royalty-free, which means that any developer, company or institution can integrate it into its services.
The arrival of Facebook in this bubbling arena that is the cryptocurrency could be a “turning point” for this sector, according to Lou Kerner, investor and recognized specialist in cryptocurrencies, because it could popularize them with the general public.
It also illustrates the social network’s desire to diversify beyond online advertising, the basis of its business model, itself based on personal data: “It could be one of the most important decisions in history. Facebook “to find new sources of growth, according to RBC analysts.
Well aware of being expected at the turn, the US group has also decided to entrust the management of Libra to an independent entity, based in Geneva (Switzerland) and composed of companies such as issuers of credit cards Mastercard and Visa, the services of Pay Stripe and PayPal, the Lyft and Uber car reservation companies, and the Women’s World Banking network, which helps disadvantaged women from emerging countries gain access to financial services.
This will also serve to ensure the stability of this new virtual currency so that it avoids the huge fluctuations that have tarnished the image of cryptocurrencies such as bitcoin.
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More than a billion people excluded from the banking system
This project has the potential to allow more than one billion people “excluded from the banking system” to access e-commerce and financial services, says Dante Disparte, Libra association.
“Sending money to a friend should not be more difficult than ordering an Uber,” says Peter Hazlehurst, Head of Payment Operations at Uber.
By entrusting the management to a separate entity, Facebook seeks to reassure on two fronts: it will not be at the helm and everything will be done so that Libra is not a victim of the same mistakes as bitcoin, which attracted speculators and criminals.
The financial information stored in Calibra will be strictly separated from personal data held by Facebook and will not be used to target advertising, assured Kevin Weil, a Calibra official.
The currencies used to buy Libra will serve as a reserve and collateral for the virtual currency, the value of which will be indexed to a basket of traditional currencies.
Like other virtual currencies, Libra relies on the technology of the ” blockchain ” (chain of blocks), a kind of huge public and tamper-proof registry that makes virtual currency transfer fast, anonymous and secure.
“It is not a matter of trusting Facebook, it is to concretely trust the founding companies of the association, which is independent and democratic,” said Dante Disparte.
Libra is also a bet on the future of Facebook: the group will not earn money directly with Libra. But, in the long run, this can be used to attract users and advertisers on its platforms, or keep the current ones, and thus strengthen or create paid services or funded by advertising.