Facebook Developing Libra Cryptocurrency to 'Reinvent Money'

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Facebook says it expects to profit massively from Libra through its subsidiary Calibra which will host digital wallets.

He said it was a long anticipated move after Telegram, a chat network that rivals Whatsapp, announced its intention to enable payments with a cryptocurrency called Grams. Libra will let you send money to nearly anyone with a smartphone, as easily as a text message and at "low to no cost", Facebook says.

Deeply aware of its reputation on privacy, Facebook ($FB) is handing over management of the project to an independent, non-profit consortium based in Switzerland, which is now comprised of more than two-dozen companies ー from tech stalwarts like Uber ($UBER) and Spotify ($SPOT) to payment and credit-card processors like Visa ($V) and MasterCard ($MA) ー that will be known as the Libra Association. We don't need Libra; for us, traditional U.S. dollars work just fine.

It was a view echoed by RBC Capital Markets' analysts Mark Mahaney and Zachary Schwartzman who issued a report stating: "We believe this may prove to be one of the most important initiatives in the history of the company to unlock new engagement and revenue streams".

CEO of Facebook, Mark Zuckerberg, shared on Facebook Libra's mission and vision. "It is out of question" that Libra "become a sovereign currency", Le Maire said in an interview with Europe 1 radio, per Bloomberg.

Libra aims to offer a way for the world's 1.7 billion unbanked adults to pay for goods and services and to send money to others for low fees.

Meant to be officially released in 2020, the digital currency is powered by blockchain technology.

Instead, "Libra will provide the most immediate value to consumers with limited or no access to financial services", said a statement from the Libra Association.

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Facebook's Libra token is already facing a legal threat, with senior American parliamentarians asking the social network to cease "momentum going forward" while they probe the project - and take their fight to the greater cryptocurrency industry. Users will be able to convert their local currency to Libra which will be stored in the Calibra app, a valuation of the currency is yet to be determined, but the idea is that it will have a similar value to a euro, dollars, or British pound. The company selling the product could then use that token to buy more ad space on the social network, and so the cycle would start anew.

It's a pitch that comes as Facebook has come under repeated fire from users and lawmakers over privacy and security concerns.

Facebook said it won't share account information or financial data with Facebook or any third party without a users' consent - meaning that account information can't be used to improve Facebook's ad strategy. Other members include Visa, Mastercard, Uber, Lyft and Spotify.

Facebook said it had linked with 28 partners to form Libra Association, a Geneva-based entity governing its new digital coin, which will be launched in the first half of 2020.

Facebook's asset runs on an open-source blockchain called the "Libra Blockchain", and operates in relation to a reserve, the whitepaper said.

Waters, a California Democrat, said Facebook "has repeatedly shown a disregard for the protection and careful use of this data".

The price of bitcoin climbed above $9,000 for the first time in a year on anticipation of the Libra announcement, indicating the importance of a mainstream company with the size and scope of Facebook throwing its weight behind the evolving digital coin space. "Libra's design does leverage the blockchain, preserving the privacy of transactions from outsiders peering in, but the facilitation role played by Facebook and other partners leaves the company the ability to penetrate that veil of privacy".

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