Facebook plans to establish a system for digital payments in at most ten countries by the end of the first quarter next year.
Negotiations are held with American financial institutions as well as cryptocurrency exchanges. One such exchange was created by Marc Zuckerberg’s “sworn enemies”, the Winklevoss brothers, who were once cofounders of Facebook.
The secretive Facebook unit that created the new currency (referred as GlobalCoin in the company) has been at work for more than a year. It can be used by more then two billion people to send money to one another and to purchase things, not only through Facebook, its subsidiaries (Instagram and WhatApp), but also other online stores according to the Financial Times and other crypto news source .
Facebook awill reveal more information this summer. Zuckerberg already discussed with Mark Carney, Governor of the Bank of England, the potential and risks of a cryptocurrency. He also sought advice from US Treasury officials. While he made contact with Western Union money carriers to find cheaper ways for his users, he is currently mediated.
The Facebook initiative (the relevant code bears the Project Libra) is expected bring banks into competition as it will lower the cost of money transfers. Facebook has already reached out to e-commerce firms to allow them to accept the new currency in order for online transactions.
Blockchain technology is the basis of cryptocurrencies, such as the Bitcoin. Facebook is reportedly planning to anchor its new currency in a “basket” of existing currencies (dollars, euros, yen etc.). To prevent market volatility,
Facebook created Facebook Credits 10 years ago. It was an experiment that failed to gain any interest from users and ended almost two years later. It’s now hoping for better.
It is not clear if Facebook users-consumers will trust Facebook enough for them to allow them to trade their digital currency with their real money.
However, the investigations by the US and Europe authorities into Facebook’s cryptocurrency Libra have raised concerns about the other companies who are working with Mark Zuckerberg.
According to unnamed sources, some of them are considering ending cooperation with Libra. The Libra Association, Facebook’s cryptocurrency partnership, has 28 members, including Visa, Mastercard and Uber as well as Calibra, Spotify, Spotify, and Calibra. All participating companies have signed a non-binding agreement not to invest more than 10 million dollars in this effort.
The European Commission has been scrutinizing Facebook’s plans to create its own cryptocurrency, Libra. This is to determine if it is a monopoly. According to Bloomberg, the EU is concerned about Libra’s potential restrictions on competition due to the information that will be exchanged and its use of consumer data.
According to estimates, around 30 million people currently use cryptocurrency.