The cryptocurrency, called Libra, was announced in a Facebook white paper stating its mission: to enable billions of people around the world to enter the financial market.
“Libra’s mission is a simple global currency and financial infrastructure that empowers billions of people,” the white paper states.
The move was enthusiastically welcomed by industry stakeholders, and FinTech Australia chief executive Rebecca Schot-Guppy said such a rollout would open up new markets and drive fintech innovation.
“Another interesting prospect is that Facebook’s reach could also help educate the public about the power of blockchain and cryptocurrency. Caliber [digital wallet for Libra] could bring these technologies mainstream and within the reach of every Australian,” she said.
Assembly Payments co-founder and co-CEO Simon Lee said it appeared Facebook was trying to copy what WeChat and Alipay had done in China.
“We see Calibra as Facebook’s attempt to broadcast what’s happening in China to the rest of the world. They saw the opportunity and have the scale to execute on it,” he said.
The currency will be built on the Libra blockchain and backed by a pool of assets designed to give it intrinsic value, but perhaps the biggest nod to consumers is that it will be governed by an independent association.
Facebook has been plagued by user privacy controversies, reportedly leading many consumers to be skeptical about integrating the social media platform into their financial lives.
However, the Libra Association is trying to placate these voices by establishing it as a governing body made up of companies such as Visa, Mastercard, Uber, eBay, Spotify and Vodafone.
The association, according to the white paper, will facilitate the operation of the blockchain and manage the Libra reserve, making it the only party capable of minting and burning coins.
The association notes in the white paper that it is important to move toward increasing decentralization to ensure there remains a low barrier to entry for the network.
Neobank Maslow chief executive Kane Jackson said the concept of the association showed Facebook was aware of what was needed for the coin to thrive.
“Facebook appears to understand that widespread adoption of financial products will not be possible without decentralization of their governance and an inclusive community approach to their management,” he said.
Facebook has also launched a subsidiary called Calibra that will manage its crypto transactions with the aim of separating user privacy, meaning Libra payments will not mix with Facebook data.
Although Calibra functions as its own app, the wallet will integrate directly with WhatsApp and Facebook Messenger to use Facebook’s vast network to promote cryptocurrency.
It’s this promotion of the network that excites Jasper Lawler, head of research at London Capital Group, who said the network will open up other cryptocurrencies to billions.
“Libra will bring cryptos to a much wider audience. Two billion people will now be much more open to Bitcoin and other altcoins,” he said.
Because Libra is a stable coin, it will have less volatility than a crypto like Bitcoin because it is tied to the value of real-world currencies, Lawler said.
“The various properties of a stablecoin complement rather than compete with cryptocurrencies like Bitcoin, Ethereum and Ripple. Being pegged to regular currencies makes stablecoins less volatile and more suitable for processing payments,” he said.
The announcement saw an overnight rally for Facebook, but the community will have to wait and see how the coin’s rollout goes as no launch date has been set.
