The cryptocurrency, called Libra, will also have to overcome concern that Facebook does not effectively protect the private information of its users.
Business
Standard : Facebook unveiled an ambitious plan on Tuesday to
create an alternative financial system that relies on a
cryptocurrency that the company has been secretly working on for more
than a year.
The
effort, announced with 27 partners as diverse as Mastercard and Uber,
could face immediate skepticism from people who question the
usefulness of cryptocurrencies and others who are wary of the power
already accumulated by the social media company.
The
cryptocurrency,
called Libra, will also have to overcome concern that Facebook does
not effectively protect the private information of its users — a
fundamental task for a bank or anyone handling financial
transactions.
But
if the project, which Facebook hopes to begin next year with 100
partners, should come together, it would be the most far-reaching
attempt by a mainstream company to jump into the world of
cryptocurrencies, which is best known for speculative investments
through digital tokens like Bitcoin and outside-the-law e-commerce,
like buying drugs online.
The
company has sky-high hopes that Libra could become the foundation for
a new financial system not controlled by today’s power brokers on
Wall Street or central banks. “It feels like it is time for a
better system,” David Marcus, head of Facebook’s blockchain
technology research, said in an interview. “This is something that
could be a profound change for the entire world.”
Marcus
and other Facebook
executives conducted press interviews ahead of the unveiling of their
project at the historic San Francisco Mint, a nearly 150-year-old
building that once housed one-third of the US gold reserve.
Mark
Zuckerberg, Facebook’s chief executive, has discussed his
fascination with cryptocurrencies in recent years. And over the last
few months, he has promised to offer users better privacy on
company-owned services like Facebook, Instagram and WhatsApp.
But
improving the privacy of users will make it harder for Facebook to
show them ads tailored to their interests. A virtual financial
network, if it should work, would be a way for the company to find
new revenue if ad sales should drop.
The
payment system would also help Facebook and other American companies
compete for financial transactions in developing countries, where
WeChat, developed by the Chinese company Tencent, already offers a
highly profitable payments system built into its popular messaging
product.
