Facebook are to announce details this week of their plan of to release their own cryptocurrency which is thought to be unlike any currency in the crypto market as of yet.
The point of the project, known as Libra, is so that users can change dollars, or whichever currency they choose, into digital coins that can then be used on the web to pay for goods or to transfer money without ever having to use a bank at any point. The target audience of the project is thought be any of its 2.6 billion users as well as those on WhatsApp and Instagram.
The company also wants to create their own cryptocurrency, as a way of reinventing the image digital money currently has.
Controversy has already clouded the social media giant, however, as they face criticism over the purpose of this type of finance. Instead of this currency being formed as an independent rebellion against the global financial market, as with other digital currency that has been decentralised, such as Bitcoin or Litecoin, it has instead found sponsorship from 12 very financially successful companies. This includes eBay, Uber, PayPal and Mastercard and Visa with it thought that have invested $10 million each in an attempt to be a part of the new venture.
The new Facebook currency will also be attached to government-issued currencies so they can attempt to avoid problems and fluctuations which other Crypto Market contenders have faced in the financial market.
An example of this is the Bitcoin, which was originally sold for a few cents, before rising to its highest value of around $20,000 per coin at the end of 2017 and now, according to CoinDesk’s Bitcoin price index, is valued at around $9,000 for the first time in a year after the recent announcement from Facebook.
The plan is thought to cost around $1 billion and Mark Zuckerberg, founder of Facebook, has already discussed the case with the US treasury and spoken to the Bank of England’s Governor, Mark Carney, last month.
When speaking at the company’s developer conference, Zuckerberg said: “Payment is one the areas where we have an opportunity to make it a lot easier.
“I believe it should be as easy to send money to someone as it is to send a photo.”
There have already been reports that Facebook may start to pay users for doing things like viewing ads, shopping with companies affiliated with the social media network and interacting with certain content.
Due to previous problems that occurred for Facebook regarding their data policies, there is a worry that Facebook may not be fully trusted when it comes to dealing with people’s money.
Although it has been reported that Facebook will not directly be in charge of people’s money, it is thought some shareholders will have hold of ‘nodes’ that will give them certain levels of control over the finance.
Nevertheless, RBC Capital Market has faith in Facebook and in a note to the investors Mark Mahaney and Zachary Schwartzman, said: “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.”