Facebook is now officially moving into the cryptocurrency sector according to a recent in-depth Wallstreet Journal article. The project called “Project Libra” is focussed on creating a payment network with a native stablecoin. The report adds that Facebook is currently in talks with Visa, Mastercard, First Data and various merchants to create the network which has the potential to serve the one-third of the world’s people who log on monthly to Facebook.
Facebook appears to be recruiting dozens of financial firms and online merchants to help launch a cryptocurrency-based payments system, code-named Project Libra, on the back of its gigantic social network.
From the WSJ:
The effort, should it succeed, threatens to upend the traditional, lucrative plumbing of e-commerce and would likely be the most mainstream application yet of cryptocurrency. It comes as the social-media giant is under intense pressure from regulators, users and shareholders to address privacy shortcomings.
At the heart of the initiative, underway for more than a year, is a digital coin that its users could send to each other and use to make purchases both on Facebook and across the internet, according to people familiar with the matter.
Facebook’s secretive plans for a new payments system involve both investments from traditional financial firms and the potential for users to be rewarded for their activity on the platform.
As soon as the WSJ news on Facebook’s hit the market last week, Bitcoin went up 6.59% to trade at $5814 against US Dollar. Further, the positive effect can also be seen on other altcoins such as Ethereum, trading at $168.83 against the US dollar with a 4.64% lift on the news.
A source close to the situation confirmed to The Block aspects of The Journal’s report, including that Facebook is recruiting financial firms to help with the project’s launch and that its name is Libra.
Big takeaways from the report:
- Facebook is planning to launch a full payments network (rather than just remittances) and in discussions with payment networks Visa and Mastercard, payments processors such as giant First Data as well as large e-commerce merchants to support the launch.
- Facebook is seeking up to $1 billion in investments collectively from these firms in order to act as collateral to bolster and back a stablecoin that will be associated with the payments network.
- A stablecoin will exist as the currency of the payments system in order to eliminate credit card fees for merchants as well as to avoid the volatility of other cryptocurrencies like bitcoin and ether.
- The company is considering tying the coin to Facebook’s core ads engine, rewarding users for viewing ads and then purchasing goods, similar to how loyalty points rewards work.
Facebook’s secretive plans for a new payments system involve both investments from traditional financial firms and the potential for users to be rewarded for their activity on the platform.
