Illustration by James Bareham / The Verge
Facebook plans to launch its cryptocurrency by the first quarter of next year, reports BBC News and TheVerge. The company is expected to reveal more details about the currency this summer, before testing begins later in 2019. The currency, which is being referred to internally as “GlobalCoin,” will reportedly be available in around a dozen countries at launch, where it’s expected to offer people affordable and secure payments without the need for a bank account.
The social media giant wants to start testing its crypto-currency, by the end of this year. The currency will need to overcome numerous technical and regulatory hurdles before it can be launched. Facebook is expected to outline plans in more detail this summer, and has already spoken to Bank of England governor Mark Carney. The two had met to discuss the opportunities and risks of the planned digital currency. However, Facebook might have a harder job on its hands in India, which has taken a hostile attitude towards virtual currencies. India is reported to be a key focus for the new currency, where Facebook hopes it will allow Indian workers abroad to send money back home to their families using WhatsApp.
Facebook has also sought advice on operational and regulatory issues from officials at the US Treasury. They also contacted money transfer firms like Western Union, to discuss operational and regulatory issues relating to the cryptocurrency. Currently, Western Unoin looks for cheaper and faster ways for people without a bank account to send and receive money.
Facebook wants to create a digital currency that provides affordable and secure ways of making payments, regardless of whether users have a bank account. The social networking site, which owns WhatsApp and Instagram, is hoping to disrupt existing networks by breaking down financial barriers, competing with banks and reducing consumer costs.
Nicknamed Project Libra, Facebook's plans for a digital currency network were first reported last December. However, TheVerge first showcased Facebook’s cryptocurrency ambitions last May, when it was reported that David Marcus, who previously served on the board of directors for Coinbase and was president of PayPal between 2012 and 2014, was leading the company’s new blockchain division.
The Libra project will see it join forces with banks and brokers that will enable people to change dollars and other international currencies into its digital coins. A small group of co-founders are expected to launch the Swiss-based association in the coming weeks. Facebook is also reportedly in talks with a number of online merchants to accept the currency as payment in return for lower transaction fees.
cryptocurrency is a digital currency built with cryptographic protocols that make transactions secure and difficult to fake. The most important feature of a cryptocurrency is that it is not controlled by any central authority: the decentralized nature of blockchain makes cryptocurrency theoretically immune to the old ways of government control and interference. Cryptocurrencies make it easier to conduct any transactions, for transfers are simplified through use of public and private keys for security and privacy purposes. These transfers can be done with minimal processing fees, allowing users to avoid the steep fees charged by traditional financial institutions.
Today cryptocurrencies have become a global phenomenon known to most people. While still somehow geeky and not understood by most people, banks, governments and many companies are aware of its importance. In 2019, you‘ll have a hard time finding a major bank, a big accounting firm, a prominent software company or a government that did not research cryptocurrencies, publish a paper about it or start a so-called blockchain-project.
Facebook has come under fire in recent years over its handling of users' personal data, and regulators are likely to examine the launch closely. Earlier this month, the US Senate and Banking committee wrote an open letter to Mr Zuckerberg questioning how the currency will work, what consumer protection will be offered and how data will be secured.
Facebook has also discussed the process of identity checks and how to reduce money laundering risks with the US Treasury. It is believed that Facebook and its partners want to prevent wild swings in the coin's value by pegging it to a basket of established currencies, including the US dollar, euro and Japanese yen.
It's 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 after 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 the digital coin.
The biggest attraction of digital currencies to banks and big firms is the technology that underpins them. Blockchain technology can help to slash the time and cost of sending money across borders by bypassing banking networks.
Lord King, the former Governor of the Bank of England, warned two decades ago that central banks could become "irrelevant" if people started to use digital currencies as pounds and pennies are used today.
Garrick Hileman, a researcher at London School of Economics, said the GlobalCoin project could be one of the most significant events in the short history of crypto-currencies. Conservatively, he estimated that around 30 million people use crypto-currencies today. That compares to Facebook's 2.4 billion monthly users.