Social media giant Facebook has unveiled plans to launch a new digital currency, called Libra, next year.
It said people would be able to make payments with the currency via its own apps, as well as on messaging service WhatsApp.
Firms such as Uber and Visa are also likely to accept it in future, it said. But there have been concerns about how people’s money and data will be protected, as well as over the potential volatility of the currency.
According to BBC, Facebook said Libra would be independently-managed and backed by real assets, and that paying with it would be as easy as texting. It is the latest foray by a tech giant into the payments sector, after Google Pay, Apple Pay, and Samsung Pay although none of those services are based on a crypto-currency.
According to Facebook, from next year you will be able to buy Libra via its platforms and store it in a digital wallet called Calibra. You can then send your Libra to other users, it said, “as easily and instantly as you might send a text message”.
It said transactions would be at “low to no cost”, although the firm is expected to take a small commission on payments made through its platforms.
It said all the group’s members were eventually likely to accept Libra, including Payments firms such as Mastercard and PayPal. Digital businesses including eBay, Spotify, and Uber.Telecoms firms such as Vodafone and charities such as the microfinance group Women’s World Banking. Facebook also said it expected Libra would be bought and sold on currency markets in the future.
Facebook said Libra was particularly aimed at the 1.7 billion adults worldwide who do not have a bank account. It said the issue of being “unbanked” disproportionately affected people in developing countries, and in particular women.
However, while the social network says the currency will be global, apps and services that use Libra will need to be compliant with the regulatory regimes in the markets they operate. Facebook has faced questions from US politicians about how the currency will work, what consumer protection will be offered and how data will be secured.
The social network hopes to prevent wild swings in the value of the currency by pegging it to a basket of well-known currencies, including the pound, US dollar, Japanese yen, and euro.
Facebook also said its Calibra payments system would have strong protection to keep money and personal information safe. It said Calibra would use the same verification and anti-fraud processes that banks and credit cards use and would refund any money that was stolen.
Other virtual currencies such as Bitcoin have seen huge fluctuations in value, and have also been used to launder money.
As reported by The Sauce severally, Facebook has been criticized for failing to protect its users’ data in the past.
This is not the first time Facebook has dabbled in digital currencies. A decade ago, it created Facebook Credits, a virtual currency that enabled people to purchase items in apps on the social networking site. However, Facebook ended the project after less than two years when it failed to gain traction.
The biggest test is likely to be whether people will trust the social networking giant enough to start changing their cash for Libra. To build trust in the system, Facebook has been engaging with governments, central banks, and regulators, including officials from the US Treasury and the Bank of England.
