Facebook today announced a new Calibra subsidiary that will provide a new cryptocurrency and financial infrastructure called Libra.
“Calibra will let you 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,” a new Facebook post explains. “And, in time, we hope to offer additional services for people and businesses, like paying bills with the push of a button, buying a cup of coffee with the scan of a code or riding your local public transit without needing to carry cash or a metro pass.”
Calibra’s initial offerings will be a bit more modest, however, and will include the Libra blockchain-powered cryptocurrency and a digital wallet that will be available in Facebook Messenger, WhatsApp, and as a standalone app.
The goal, Facebook says, is to provide people around the world with a simple, secure way to save, send, and spend money.
“For many people around the world, even basic financial services are still out of reach: 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,” Facebook continues. “The cost of that exclusion is high — approximately 70 percent of small businesses in developing countries lack access to credit and $25 billion is lost by migrants every year through remittance fees.”
The success of Calibra and its Libra cryptocurrency is not assured, of course. Facebook faces regulatory pressures from around the globe thanks to its monopoly power in social networking. And it is entering a market that is today dominated by Bitcoin.
But Libra has a few advantages over Bitcoin, which has proven to be a volatile currency. Libra is backed by governmental currencies like the U.S. Dollar and the Euro, so it should suffer from the wild value fluctuations that Bitcoin has experienced. It requires that anyone utilizing the currency prove their identity using government identification, which should help reduce abuse. And it has already amassed important financial partners like eBay, PayPal, and Visa, each of which will invest at least $10 million in the effort. Facebook expects to have at least 100 partners on board by the time Libra launches.
On that note, Facebook expects Libra to go live in the first half of 2020.