Facebook is set to roll out a digital payment system in at least ten countries in the first quarter of next year.
The relevant negotiations are being conducted with major US financial institutions and with cryptocurrency exchanges, including the "sworn" enemies of Marc Zuckerberg, the Winklevoss twin brothers, once co-founders of Facebook.
A secret Facebook unit has been working for over a year to create the new currency (called GlobalCoin in the company), which can be used by more than two billion users to send to each other, as well as to things not only on Facebook and its affiliates (Instagram, WhatApp) but also in various other online and physical stores, according to the Financial Times, the BBC and other crypto news sources.
Facebook is expected to reveal more details this summer and already Zuckerberg has discussed with Bank of England Governor Mark Carney about the possibilities and dangers of such a cryptocurrency. He also sought advice from US Treasury officials, as he made contacts with money carriers such as Western Union, looking for easier and cheaper ways for his users to transfer money without a bank account.
The Facebook initiative (the project in question is coded Project Libra) aims to put banks in competition as it reduces the cost of money transfers. Facebook is already in contact with e-commerce companies to accept the new currency for online transactions.
A cryptocurrency (along with the most well-known Bitcoin) is based on blockchain technology. Since they have been criticized as a vehicle for speculation, Facebook should anchor its new currency in a 'basket” of established currencies (dollars, euros, yen, etc. ) to avoid sudden fluctuations in market value.
Ten years ago, Facebook created the virtual currency called Facebook Credits, an experiment that came to a strange end after almost two years, because it showed no interest in users. Now he hopes for something better.
The big question is whether users will trust Facebook enough to exchange their money with their digital currency so that they can deal with it.
From another perspective, however, investigations by European and American authorities via Facebook have led to its cryptocurrency, Libra, other companies cooperating with Mark Zuckerberg on this project.
Some of them are even considering stopping cooperation for Libra, according to anonymous sources from companies that spoke to the "Financial Times". The Libra Association, Facebook's crypto-currency partnership, has 28 members, including Visa, Mastercard, Uber, Spotify, and it's subsidiary Calibra. All the companies have entered into a non-binding contract to invest in this effort of more than $ 10 billion.
Since last week, the European Commission Facebook has been planning to put its own cryptocurrency, Libra, under a microscope to see if the whole project is a monopoly practice. The EU fears Libra will create "possible restrictions on competition" from information exchanged and the company using consumer data, says European Commission document obtained from Bloomberg.
It is estimated that approximately 30 million people today use cryptocurrencies.