Facebook changed the way we communicate. Now the social media giant wants to change how its roughly 2.4 billion users think about using a cryptocurrency to make everyday purchases.

Earlier this week, the social network and its partners unveiled a global digital coin called Libra, confirming details of a project that had been leaking out in dribs and drabs for months. Libra, which will be managed by a governing body and backed by stable financial assets, is expected to debut in the first half of 2020.

Facebook and the Libra Association, the body that will govern the coin, hope to create stable digital money that will give users confidence in its value and won’t be subject to the wild gyrations of more recognized cryptocurrencies, such as bitcoin. The group is also trying to alleviate concerns that Libra could be used for money laundering or black market transactions, saying it would work with authorities around the world to ensure Libra conforms to regulations in multiple countries and jurisdictions.

The efforts to woo politicians and regulators, however, seemed to fall flat. Almost immediately after the announcement, the US and European politicians expressed concern about Libra, saying Facebook’s history of privacy problems raised questions about whether it was a fit steward of people’s financial data.

Rep. Maxine Waters, who chairs the House Financial Services Committee, said Facebook “has repeatedly shown a disregard for the protection and careful use of this data.” The social media company faces a record-setting fine of up to $5 billion from the Federal Trade Commission, which has been investigating Facebook for allegedly failing to protect user privacy. A Senate committee has scheduled a hearing on July 17 to discuss Libra.

In Europe, the reaction was similar. Bruno Le Maire, France’s finance minister, told Europe 1 radio that Libra was fine if its use was limited to transactions, according to AFP. But the social network shouldn’t be allowed to create a “sovereign currency” that could be used to issue debt or serve other functions associated with government-issued money. Bank of England Gov. Mark Carney referenced Libra at a meeting of Portugal, saying, “Anything that works in this world will become instantly systemic and will have to be subject to the highest standards of regulation,” according to Bloomberg.

Facebook’s cryptocurrency ambitions are the latest example of the social network’s efforts to cement itself in the daily lives of its users. If Facebook and its partners can persuade people to use Libra, the social network could attract new users, keep them online longer and generate more revenue outside of advertising, which made up 99% of its $15 billion in sales in the first three months of 2019.

Although the, for now, it seems risky in significant time it can very well change the game of finance

Comments Below

comments