It will be on the market sometime in 2020.
Would you trust Facebook with your money?
On Tuesday, Facebook confirmed it would launch a digital global currency kind of like Bitcoin, called Libra, aimed at users around the world who don’t have bank accounts.
But there’s one more reason Facebook is introducing Libra, said Wedbush analyst Michael Pachter: It’s an opportunity to get some of its over 2 billion users to shop through the platform.
“Facebook is simply making an attempt to facilitate commercial activity for its customers, and the endgame is to offer links to brands they care about,” he said.
The currency is managed by the Libra network, co-founded by several firms in both the payments and tech industries, including Facebook, eBay, Uber, Lyft, PayPal and Visa.
“Moving money around the world should be as simple and cheap as sending a text message,” reads a description on Libra’s website, noting over 1.7 billion people worldwide don’t have a bank account.
With Facebook’s huge user base, even a small portion of that audience jumping to cryptocurrency gives Libra a boost, said Pachter. “Even 1 chronicles is 20 million people. That’s enough,” he said.
Facebook also introduced a digital wallet called Calibra, which is anticipated to launch on messenger, WhatsApp and as a standalone app next year.
The wallet will at first allow users to send money to each other before eventually adding new services such as “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 having to carry money or a metro pass,” said Facebook in a statement.
Screenshots of the app provided by Facebook show balances both in the Libra currency and converted to U.S. dollars. Facebook said the value of Libra will be pegged to a basket of established currencies such as the U.S. dollar, the euro and the yen.
Easier to buy?
Avivah Litan, distinguished research vice president for Gartner, says Libra may offer a more attractive option for Facebook users who wish to shop however don’t want to enter a credit card number.
“Basically, it’s going to be a lot easier to buy things within ads currently, as long as you sign up for it,” she said.
In its statement, Facebook said it’ll use “strong protections” to keep users’ information and money safe. “We’ll be using all the same verification and anti-fraud processes that banks and credit cards use, and we’ll have automated systems that will proactively monitor activity to detect and stop fraudulent behavior,” said the corporate.
However, Libra could magnify privacy problems such as its stewardship over user information that has landed Facebook in hot water. Last month, a co-founder of Facebook wrote a New York Times op-ed calling for a breakup of the tech giant, which chief operating officer Mark Zuckerberg has said would make its effort to resolve privacy problems harder.
Meanwhile, Litan said people concerned with Facebook’s response to privacy problems have probably left the platform, whereas the users who stay and decide to use Libra will give up even more information.
“You’ll end up with larger privacy problems going forward, frankly,” said Litan.
Another concern, according to Litan: fake ads. Lawmakers have grilled Facebook over fake Russian ads used to sow discord among Americans during the 2016 presidential elections. Litan says Facebook still has work to do to clean up bad ads on its platform. “The cryptocurrency will just magnify that issue,” said Litan. “But now you could lose your money.”