Tech giant Facebook has announced that it is launching a digital currency called Libra by 2020; the new cryptocurrency is expected to assist billions of its social media users in conducting international transactions.
"Today we’re sharing plans for Calibra, a newly formed Facebook subsidiary whose goal is to provide financial services that will let people access and participate in the Libra network. The first product Calibra will introduce is a digital wallet for Libra, a new global currency powered by blockchain technology. The wallet will be available in Messenger, WhatsApp and as a standalone app — and we expect to launch in 2020," Facebook said in a statement.
The social media giant expects that the new digital currency will help resolve the problem of inaccessibility of "even basic financial services" that many people across the world face.
"Almost half of the adults in the world don’t have an active bank account and those numbers are worse in developing countries and even worse for women. The cost of that exclusion is high — approximately 70% of small businesses in developing countries lack access to credit and $25 billion is lost by migrants every year through remittance fees," the statement noted.
The Calibra digital wallet will, in turn, enable its users to "send Libra to almost anyone with a smartphone, as easily and instantly as you might send a text message and at low to no cost," according to Facebook.
The social media giant also plans to offer new services in the future such as paying bills or rides on public transport and making other purchases with "the push of a button" or "the scan of a code."
As with most cryptocurrencies, Libra will be operated and secured by any stakeholder that has access to a computer.
Given that Facebook is used by an estimated over 2 billion people, its planned cryptocurrency, Libra, may become a significant cash cow for the social media giant, and could potentially alter its conventional financial model, the Guardian reported on Tuesday.
Later in the day, Switzerland's financial regulator FINMA confirmed that it has had contact with the orchestrators behind the anticipated currency.
Meanwhile, Facebook's move to become involved in the financial sector made British and American authorities voice their concern. Last month, the US Senate Committee on Banking, Housing, and Urban Affairs addressed Facebook CEO Mark Zuckerberg in a letter requesting responses on privacy and financial regulation of social media.
“It is important to understand how large social platforms make data available that can be used in ways that have big implications for consumers’ financial lives,” the letter read. “It is also important to understand how large social platforms use financial data to profile and target consumers.”
This comes after The Wall Street Journal reported earlier this month citing sources, that Facebook was going to announce a new cryptocurrency, and that Visa, Mastercard, PayPal and Uber Technologies would invest some $10 million each in a consortium that would govern the digital coin.
Rumours that the social network giant, and owner of Instagram and WhatsApp, plans to create its own digital currency have been circulating since last year. The reports about Facebook’s ambition to launch its own digital currency surfaced last December.