Facebook plans to enter the cryptocurrency market in early 2020.
This week, Facebook announced its plans to enter the cryptocurrency and digital payments market. Libra, the company’s new digital currency, will initially be used for global money transfers. Facebook plans to launch Libra in early 2020.
This announcement was embraced by most analysts who are excited about the potential for Facebook’s newest venture. The company’s stock has risen and fallen several times since the announcement.
Details about the cryptocurrency
Digital currencies are nothing new but what makes Libra unique is that it will be backed by major currencies. This will keep it from fluctuating too much in value which has been a problem for cryptocurrencies like Bitcoin.
Facebook will profit from this venture largely through its subsidiary Calibra. Calibra is a digital wallet that customers can use this to hold and spend Libra currency. The company said that Calibra will make it easier for users to “access and participate in the Libra network.”
With Calibra, users can send Libra to anyone with a smartphone at little to no cost. This will allow consumers to send cross-border payments without paying hefty bank transfer fees.
The wallet will be available to Facebook users who have Messenger and WhatsApp accounts. In time, Facebook hopes to allow both consumers and businesses to use Libra to pay for bills and everyday expenses.
Facebook is also creating an independent group to oversee and manage the currency, called the Libra Association. The Libra Association has already partnered with 28 companies including Mastercard, PayPal, and Visa.
Privacy concerns still haunt Facebook
Though they’ve been around for a while, most consumers don’t understand or trust cryptocurrencies. Having a company like Facebook enter the market could help legitimize the currency. Of course, Facebook still has some issues to deal with when it comes to consumer trust.
In spite of the excitement over Libra, Facebook still has ongoing public and federal inquiries about the company’s privacy policies. How the company handles these issues could affect consumers’ willingness to adopt Libra when it launches.
Facebook executive David Marcus acknowledged that the company will need to make some big changes when it comes to privacy concerns. But he said that consumers don’t have to worry about Facebook gaining access to their financial data.
