Facebook Targets Bitcoin with New Cryptocurrency

Posted on June 18, 2019 by Paul Thurrott in Cloud, Social with 29 Comments

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.

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Comments (29)

29 responses to “Facebook Targets Bitcoin with New Cryptocurrency”

  1. Avatar

    Divodd

    It is still, at the end of the day, a monetary system run by Mark Zuckerberg, and that is an extremely chilling thought in my book

  2. Avatar

    Salvador Jesús Romero Castellano

    Crypto enthusiasts use to say: "Trust the math, not organizations". This currency, at first glance, defies this axiom.

    However, it can be a very convenient way for people to exchange money, and that can lead them to real cryptos. I hope they achieve some degree of success because of that.

    I don't think I'll use it, though. Sending my ID to Facebook...

  3. Avatar

    skane2600

    I am a cryptocurrency skeptic so I'll avoid being a sucker regardless of who is running the scam.

  4. Avatar

    waethorn

    Libra, run by Libra Foundation, a who's who of Democrat-voting SJW NGO's and non-profits.


    thelibrafoundation.org/grantees/


  5. Avatar

    ponsaelius

    I think it's an interesting development. I think it's right that people think Facebook is the very opposite of privacy and has a cavalier attitude to personal data. The idea that Facebook would be someone's "bank" is quite scary. However, it seems to be a practical use for blockchain technology. It's easy to dismiss in the western world where we have reliable banking available. In the developing world Facebook may be seen as more reliable than their banks.

  6. Avatar

    MacLiam

    Has anyone checked with the Winkelvoss twins to see how they feel about this? Z might want to double his investment in personal security services for the next few to several years.

    I'm not as negative as others here on the prospects of the Libra service (or LIbra-like but under other management), but even with the inherent security of blockchain technology and requisite dunce-proofing at the user end I think a lot of careful design will be needed to keep it free of the criminals of the world who are undoubtedly already making plans to exploit it.

  7. Avatar

    nbplopes

    Facebook has not yet understood that lacks credibility.


    They seam to be looking for new ways to have used data in clear text.

  8. Avatar

    codymesh

    just how lost is this company right now?

  9. Avatar

    christian.hvid

    Every currency on the planet is essentially backed by the same commodity: trust.

    It occurs to me that Facebook is a little short in that department, eh?

  10. Avatar

    harrymyhre

    No way no how am I interested , but thanks for warning us Paul.

  11. Avatar

    jimchamplin

    So is Zucko’s plan to simply become a government? I think we can do better than his shifty, untrustworthy, crappy version of the Federation.


    Facebook would be more like the Galactic Empire from Star Wars. Before we know it, we’re going to have Stormtroopers with blue F logos on their armor. You know? To make sure we’re all safe and in the view of the cameras at all times.


    Then em they launch the “Privacy Star.” Named by PR, it’s an armored battle station with enough power to surveil an entire planet.

  12. Avatar

    Thom77

    "I'm sorry, you transaction didn't go through. It says here that your Facebook account has been suspended because you said something true in one of your posts"









  13. Avatar

    red.radar

    This gives me chills. It has the potential to be very successful and disruptive. However it puts way to much power under the control of a company with questionable ethics and issues with trust.


    not to mention moving currency out of the control of central banks which are, in theory, accountable to our government and puts control under one company accountable only to shareholders


    Dont exactly look forward to Facebook mining my financial transaction data ... big pass from me..




  14. Avatar

    Stooks

    Please fail and fail hard.

  15. Avatar

    B Mallon

    1) Facebook's Libra will be competing against at least 5 other established mobile payment services, like M-Pesa, in developing countries.

    2) Will anyone really trust Facebook to handle their money given how they have handled people's personal information?

    3) Their message of helping those in developing countries get access to monetary services sounds hollow and disingenuous.


    C'mon, we all know it's a cash grab....


    • Avatar

      Andi

      In reply to bmallon000:
      1. Facebook is certainly capable of a better service than M-Pesa.
      2. Why not? Facebook data is encrypted and no one has access to it. Facebook does not sell user data and only shares in strict conditions and with the users' permission.
      3. Everything is a cash grab. Apple Pay for instance is a shameless one as Apple is forcing itself into a middle man position without having contributed nothing to the contact-less payment standards.
  16. Avatar

    james_wilson

    The problem with cryptocurrency is the entry and exit points into 'real' currency. The only real way for cryptocurency to work is for the currency to be earned (Bitcoin used mining) and for it then to be able to be spent - with no desire to exchange it into another currency. Until then - it will be used for speculation.

  17. Avatar

    Tony Barrett

    Please god no. Facebook currency, FB bank. Shudder. This is the company who literally have the worst data protection record of any major company, who data mine everything they can get, and are even prepared to pay people to have access to all their data. How Zuckerberg can even think this is a good idea I don't know. Steer clear, well clear.

  18. Avatar

    Jeff.Bane

    Facebook currency. Under no circumstances, thank you.

  19. Avatar

    wright_is

    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

    I can already buy coffee (or whatever) with my banking app and when I used to take the train, the DB (German Rail) app would show the conductor a QR Code with my ticket information...

    The goal, Facebook says, is to provide Facebook with people around the world's transaction history.

    There, fixed that sentence for you.

    “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,”

    Which aren't really the sort of people travelling on the metro and buying coffee at Starbucks... :-S

    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.

    They will need to register as a certified bank (and provide the necessary securities) in Europe, at least. Also, in many countries, the currency must be freely convertible into local legal tender.

  20. Avatar

    Newtronic

    Slight but important edit: "...so it should suffer from the wild value fluctuations that Bitcoin has experienced..." should have a NOT in it.

  21. Avatar

    robotraccoon

    Yeah, that's gonna be a NO for me, dawg.

  22. Avatar

    wright_is

    Great idea, name it after a failed GM model.

  23. Avatar

    skane2600

    I'll bet Facebook's lawyers are nervous. If FB ended up being classified as a bank, things would get complicated.


    I don't see how people who don't have access to a bank are going to have legitimate government identification. I think serving the poor is just the sales pitch, but this is really targeted to more affluent people.

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