Facebook plans to launch its own currency named Libra in 2020. The Silicon Valley Masters of the Universe have unveiled more details about how the currency will operate, including a promise of privacy for its user, and the fact that the currency will be “governed” by the “Libra Association,” a group of Mark Zuckerberg’s fellow elites based in Switzerland.
Breitbart News recently reported that social media giant Facebook plans to reveal its new Libra digital cryptocurrency next week with backing from over a dozen other companies. Visa and Mastercard are reportedly quite invested in the currency while other Silicon Valley firms such as PayPal, Uber, Stripe, and Booking.com are fully supporting the currency.
Business Insider has now given some insight into how the cryptocurrency may work. Facebook has set up an independent company called Calibra to act as a digital wallet for users Libra currency, hoping to act as an alternative for the 1.7 billion people in the world without bank accounts. Facebook has also set up a non-profit “Libra Association,” in Switzerland, comprised of the companies that have already backed the project, including Visa, Mastercard, PayPal, Uber, Stripe, and Booking.com.
According to a statement, Facebook chose Switzerland because the country “has a history of global neutrality and openness to blockchain technology, and the association strives to be a neutral, international institution, hence the choice to be registered there.”
The Libra Association will govern Facebook’s currency. According to the white paper, “The Libra Association also serves as the entity through which the Libra Reserve is managed, and hence the stability and growth of the Libra economy are achieved. The association is the only party able to create (mint) and destroy (burn) Libra. Coins are only minted when authorized resellers have purchased those coins from the association with fiat assets to fully back the new coins.”
This governance modest puts the Libra cryptocurrency in stark contrast with Bitcoin, the largest and most popular cryptocurrency. Bitcoin’s decentralized system means that no governing body can choose to increase or decrease the supply of the currency, and no bank can prevent an individual from owning, sending, or receiving Bitcoins.
The Libra currency will be accessible through Facebook, Messenger, and a standalone Libra app and users will need a government-issued ID in order to open an account. Users will be able to convert their local currency to Libra which will be stored in the Calibra app, a valuation of the currency is yet to be determined, but the idea is that it will have a similar value to a euro, dollars, or British pound.
Facebook CEO Mark Zuckerberg has stated that Libra is a step forward for the company as it attempts to become a privacy-focused social media platform. In a Facebook post, Zuckerberg stated:
This is an important part of our vision for a privacy-focused social platform — where you can interact in all the ways you’d want privately, from messaging to secure payments.
Privacy and safety will be built into every step. For example, Calibra will have a dedicated team of experts in risk management focused on preventing people from using Calibra for fraudulent purposes. We’ll provide fraud protection so if you lose your Libra coins, we’ll offer refunds. We also believe it’s important for people to have choices so you’ll have the options to use many other third-party wallets on the Libra network.
It should be noted though, that despite claims that Libra will be a privacy-focused currency, there may be situations in which Calibra shares information with Facebook. Calibra’s terms of service state:
Aside from limited cases, Calibra will not share account information or financial data with Facebook, Inc. or any third party without customer consent. For example, Calibra customers’ account information and financial data will not be used to improve ad targeting on the Facebook, Inc. family of products.
The limited cases where this data may be shared reflect our need to keep people safe, comply with the law, and provide basic functionality to the people who use Calibra.
Calibra will also use allegedly anonymized Facebook data to study things such as Internet adoption:
Calibra will use aggregated Facebook, Inc. data that is not linked to your Calibra account to improve the Calibra product. For example, we may use Facebook, Inc. data to see which regions have broader internet adoption.
Calibra will use customer data to facilitate and improve the Calibra product experience, market Calibra products and services, comply with legal and regulatory obligations, and ensure safety, security, and integrity. We may also use customer data to conduct research projects related to financial inclusion and economic opportunity with, for example, academic institutions and NGOs, though any published results will only contain aggregated statistics.
However, Facebook did state in another post that many of these claims about Libra are just predictions and expectations:
This announcement contains forward-looking statements regarding our future product and business plans and expectations. These forward-looking statements may differ materially from actual results due to a variety of factors and uncertainties, many of which are beyond our control.
Meaning anything could happen between now and the launch of the currency in 2020.