The Catch-up: Why on Earth has Facebook launched its own currency?

The Catch-up: Why on Earth has Facebook launched its own currency?

Facebook Inc. (FB.O) shares on Tuesday erased an initial advance that came after the company unveiled plans for a new cryptocurrency, a move that analysts saw as a potentially major new profit stream.

What just happened? We knew that it was being developed, and now Facebook's confirmed it: the social network has officially announced that its cryptocurrency, Libra, will launch next year.

Cyber experts have branded Facebook's attempt to enter the cryptocurrency realm next year as a unsafe power grab, calling it the "most invasive" form of surveillance yet, according to The Sun.

"Combining transaction data from the Calibra app with the social data that Facebook and WhatsApp and Instagram has, that's where the treasure trove is", Teunis Brosens, ING's lead economist for digital finance and regulation in Amsterdam, said.

Phil Chen, decentralized chief officer at HTC, said Facebook's foray into cryptocurrency is part of a "dangerous" power grab.

Calibra also won't share account or financial information for Facebook, aside from limited cases. WeChat's payment feature is widely used in China-both for paying bills and for sending small payments to friends. Facebook's founder - Mark Zuckerberg - has remained tight-lipped about the project, which will deliver a powerful new revenue stream to the embattled company now facing a potential federal antitrust investigation as well as privacy policy probes. Lyft, Uber, Spotify, and eBay are among the marketplaces that have joined up, with a number of blockchain (Coinbase, Anchorage) and venture capital firms (Andreessen Horowitz, Breakthrough Initiatves) in the Association as well.

Facebook also is touting the new digital currency as a service for the 1.7 billion adults worldwide, by a World Bank estimate, who don't have access to a bank account, which could particularly benefit women and people in developing countries.

Switzerland's financial watchdog said it was in contact with the initiators of the Libra project but declined to comment on whether it was obtaining specific regulatory permission or status.

U.S. Senator Mark Warner, a Virginia Democrat who also sits on Senate Banking Committee, expressed concern that through Libra, Facebook was using its scale in social networking to achieve dominance in adjacent markets like mobile payments. However, Facebook says that anyone will be free to build software on top of the Libra network. Facebook expects to have at least 100 partners on board by the time Libra launches. Governance decisions will be made by a vote of Libra Association members, with Facebook's vote carrying the same weight as other Libra Association members.

What can I do with Libra?

That could make the Libra blockchain a permanent record of all purchases or cash transfers every individual makes, even if they're stored under pseudonyms rather than real names. "It is frankly baffling to me that a company with a massive data privacy problem launched a non-private global currency", said Matthew Green, associate professor of computer science at the Johns Hopkins Information Security Institute in the United States, via Twitter. Stay tuned for a much deeper dive into Facebook's ambitious new platform in the coming days.

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