Despite being heavily criticized over the past few years over its handling of personal data and privacy, Facebook says its new global digital currency, Libra, will be a currency that “works for everyone” and that people may be able to use it as early as 2020.
Some say the move into cryptocurrency could be a way to offset advertising losses. Facebook is also creating a subsidiary company, Calibra, that will offer digital wallets to spend the new currency. The wallets will be connected to other applications such as Messenger and WhatsApp.
Facebook’s cryptocurrency will be based on real assets, or what's known as a ‘stable coin’ that has either a traditional currency or government debt backing it, making it less volatile than, for example, Bitcoin. The independent association governing the currency from Geneva, Switzerland will be made up of representatives from an initial group of 28 companies including Mastercard, Visa, Paypal, Uber, Vodafone, Thrive Capital, and Spotify to name a few. Those companies will also contribute to the currency and each run a part of the currency's network.
The idea behind cryptocurrencies is to create a politically independent currency that would not be printed by any existing government. There are currently thousands of different cryptocurrencies in the world. A cryptocurrency is a type of virtual or digital currency designed to be secure for financial transactions, and isn’t run by a single bank or institution but instead by a computer network. It is built on a blockchain which is a distributed database, or ledger, that keeps track of who owns what that runs on, in some cases, thousands of computers.