Facebook set to unveil its own Bitcoin style cryptocurrency on June 18 that would let users send money to each other and shop online – but experts say it may be used to spy on purchases
- Facebook reportedly met with regulators to debut its cryptocurrency in 2020
- The digital money dubbed Libra was previously thought to be called ‘GlobalCoin’
- Users could send others money and buy things online as well as in real stores
- A white paper explaining its basics is expected for release in just two weeks
Facebook is finally ready to unveil its own Bitcoin style cryptocurrency after months of rumours and speculation.
A white paper explaining its basics is expected for release on June 18, according to anonymous inside sources.
They claim that multiple investors have been briefed on the project by Facebook and have now been given this date.
Experts say Facebook’s new digital money may be used to spy on your purchases, however.
The currency was previously thought to be called ‘GlobalCoin’, but will now be known as Libra, the codename for the project.
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Facebook has been in contact with US and British financial regulators with a view to launching its own cryptocurrency next year. The firm’s cryptocurrency would be called ‘GlobalCoin’
Laura McCracken – Facebook’s head of financial services and payment partnerships, Northern Europe – appeared to confirm the claims at a trade conference in Amsterdam.
She added that it will be linked to a range of currencies worldwide rather than a single one like the US dollar, according to German magazine WirtschaftsWoche’s Sebastian Kirsch.
It is hoped that the move will prevent the kind of price fluctuations that have plagued Bitcoin and others.
‘The value of the Facebook Coin should be kept stable by a basket of Fiat currencies,’ Ms McCracken told WirtschaftsWoche.
Some experts believe that the Libra coin could be used by Facebook to spy on people’s purchases.
Facebook could use information about what users of the site are buying to offer better targeted adverts to attract further investment from firms.
‘A better understanding of who buys what or which brands or popular could aid Facebook in ad measurement, ranking, and targeting to amplify its core business,’ Josh Constine, tech expert and boss of gadget site TechCrunch, said.
Facebook is expected to launch a ‘stablecoin,’ which is a type of digital currency that’s typically tied to the U.S. dollar. It generally has less volatility than others like bitcoin (pictured)
Facebook has already been in contact with US and British financial regulators with a view to launching its own cryptocurrency next year, the BBC reported in May.
The would work with a new digital payments system in about a dozen countries, starting in the first quarter of 2020, reports claimed.
It is also thought that some sort of physical device will be released that will let you trade your currency for Libra at ATMs.
A firm called Libra Networks has been registered in Switzerland for financial services, Reuters reported that same month.
Previous reports have said Facebook is taking a serious look at blockchain technology under its ‘Project Libra’, in part to tackle doubts about privacy among its many users following a series of scandals.
But the targeted date appears new. The BBC said Facebook had already spoken to Bank of England governor Mark Carney and to officials at the US Treasury, and was expected to flesh out its plans this northern hemisphere summer.
Speculation began building that Facebook would pursue some kind of financial services after it scooped up former PayPal president David Marcus to lead its blockchain division.
Facebook’s currency would be ‘stablecoin’, a digital unit pegged to the dollar in contrast to more anarchic means of virtual payment such as bitcoin, according to earlier reporting by Bloomberg and the Wall Street Journal among others.
It would allow users to not only send money to each other, but also pay for things on Facebook, WhatsApp and Instagram, across the internet and even in stores where it’s an accepted form of payment.
With more than two billion users across its platforms, which include WhatsApp and Instagram, Facebook could have the clout to take a cryptocurrency mainstream and emulate the likes of WeChat in China, where the US site is banned.
WeChat allows its users to chat, shop and play games without leaving its platform, generating more revenue by offering a one-stop portal.
The social media giant is also said to have held talks with Jump and DRW, two of the most well-known high-frequency trading firms, about establishing a trading market for its cryptocurrency, according to the Financial Times.
Facebook has even met with cryptocurrency exchanges including Coinbase and Gemini, which is run by Cameron and Tyler Winklevoss, who went to Harvard with Facebook CEO Mark Zuckerberg and ultimately sued the company for stealing their idea for a social network.
Zuckerberg has said that adding e-commerce is the logical evolution of the company’s advertising-based business model.
But such a step is likely to invite more intense regulatory scrutiny at a time when Facebook is already under a cloud for abuses of privacy and the spread of fake news.
Facebook said it had disabled 2.19 billion fake accounts in the first quarter of this year, nearly double the number of the three months prior.
But Zuckerberg rejected the idea of breaking up the social media giant, saying that would hamper the fight against deceit and harmful online content.
WHAT ARE CRYPTOCURRENCIES?
A cryptocurrency is a digital currency that can be used for transactions online.
It is the internet’s version of money – unique pieces of digital property that can be transferred from one person to another.
All crytocurrencies use ‘blockchain’ and one can only be made and shared using specific agreed-upon rules. For each cryptocurrency the rules are slightly different.
Bitcoins are lines of computer code that are digitally signed each time they travel from one owner to the next. Physical coin used as an illustration
People can buy bitcoins through exchanges such as Coinbase and Bitfinex.
Bitcoin was the first cryptocurrency, created eight years ago.
Other currencies such as Litecoin and Dogecoin do the same thing but have slightly different levels of inflation and rules surrounding transactions.
Currently around 270,000 transactions are taking place every 24 hours.
These currencies don’t exist as physical or digital objects. They are just a collective agreement with other people on the network that your currency was legitimately ‘mined’.
Blockchain is the record of changes in ownership of in a currency which is broadcast through the network and maintained by computers around the world.
The network works by harnessing individuals’ greed for the collective good.
A network of tech-savvy users called miners keep the system honest by pouring their computing power into a blockchain, a global running tally of every bitcoin transaction.
As long as miners keep the blockchain secure, counterfeiting shouldn’t be an issue.
However, because cryptocurrencies allow people to trade money without a third party getting involved, they have become popular with libertarians as well as technophiles, speculators — and criminals.
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