Facebook is finally ready to reveal details about its cryptocurrency codenamed Libra.
It’s currently scheduled for a June 18th release of a white paper explaining its cryptocurrency’s basics, according to a source who says multiple investors briefed on the project by Facebook were told that date.
Meanwhile, the company’s Head of Financial Services & Payment Partnerships for Northern Europe Laura McCracken told German magazine WirtschaftsWoche‘s Sebastian Kirsch that the white paper would debut June 18th, and that the cryptocurrency would indeed be pegged to a basket of currencies rather than a single one like the US dollar to prevent price fluctuations. Kirsch tells me “I met Laura at Money2020 Europe in Amsterdam on Tuesday” after she watched fellow Facebook payments exec Paulette Rowe’s talk. “She told me that she wasn’t involved in what David Marcus’ [Facebook Blockchain] team was doing. But that I’d have to wait until June 18th when a whitepaper was supposed to be published to get more details.” She told him she thought the date was already a publicly known fact, which it wasn’t.
Then, yesterday TechCrunch received a request for a June 18th news embargo from one of the communications managers for Facebook’s blockchain team. The Information’s Alex Heath and Jon Victor also reported yesterday that Facebook’s cryptocurrency project would launch later this month.
Facebook declined to comment on any news regarding its cryptocurrency project. There is always a chance that the announcement date could fluctuate if snafus with partners or governments arise. One source says Facebook is targeting a 2020 formal launch of the cryptocurrency
The debut of Libra or whatever Facebook decides to call it could unlock a new era of commerce and payments for the social network. It could be used to offer low or no-fee payments between friends or remittance of earnings to familys from migrant workers abroad who are often gouged by money transfer services.
Sidestepping credit card transaction fees could also allow Facebook’s cryptocurrency to offer a cheaper way to pay merchants for traditional ecommerce, or facilitate microtransactions for a la carte news articles or tipping of content creators. And a better understanding of who buys what or which brands or popular could aid Facebook in ad measurement, ranking, and targeting to amplify its core business.
How Facebook’s cryptocurrency works
Here’s what we know about Facebook’s blockchain project:
Name: Facebook will likely use the Libra codename as the public facing name for its cryptocurrency, which The Information reports won’t be called GlobalCoin as the BBC had claimed. Facebook has registered a company called Libra Networks in Switzerland for financial services, Reuters reported. Libra could be a play on the word LIBOR, an abbreviation for the London Inter-bank Offered Rate that’s used as a benchmark interest rate for borrowing between banks. LIBOR is for banks, while Libra is meant to be for the people.
Token: The cryptocurrency will be a stablecoin — a token designed to have a stable price to prevent discrepancies and complications due to price fluctuations during a payment or negotiation process. Facebook has spoken with financial institutions regarding contributing capital to form a $1 billion basket of multiple international fiat currencies and low-risk securities that will serve as collateral to stabilize the price of the coin, The Information reports. Facebook is working with various countries to pre-approve the rollout of the stablecoin.
Usage: Facebook’s cryptocurrency will be transferrable with zero fees via Facebook products including Messenger and WhatsApp. Facebook is working with merchants to accept the token as payment, and may offer sign-up bonuses. The Information also reports Facebook also wants to roll out physical devices for ATMs so users can exchange traditional assets for the cryptocurrency.
Team: Facebook’s blockchain project is overseen by former PayPal President and VP of Facebook Messenger David Marcus. His team includes former Instagram VP of product Kevin Weil, Facebook’s former corporate head of treasury operations Sunita Parasuraman who The Information reports will oversee the token’s treasury, and many elite engineers cherrypicked from Facebook’s ranks. They’ve been working in a dedicated part of Facebook’s headquarters off-limits to other employees to boost secrecy, though the nature of the partnerships needed for launch have led to many leaks.
Governance: Facebook is in talks to create an independent foundation to oversee its cryptocurrency, The Information reports. It’s asking companies to pay $10 million to operate a node that can validate transactions made with its cryptocurrency in exchange for a say in governance of the token. It’s possible that node operators could benefit financially too. By introducing a level of decentralization to the governance of the project, Facebook may be able to avoid regulation related to it holding too much power over a global currency.
Credit: techcrunch.com
