Published: Wed, June 19, 2019
Finance | By Loren Pratt

Facebook cryptocurrency launch meets widespread skepticism, demand for safeguards

Facebook cryptocurrency launch meets widespread skepticism, demand for safeguards

The e-IOU notes are backed by actual financial assets, collectively known as the Libra Reserve, which will allow the digital amusing money to be converted to local fiat currencies.

Facebook said it would not make any money through Libra or Calibra but was seeking to "drive adoption and scale" before exploring ways to monetize the new system.

Company officials emphasized that Libra is a way of sending money across borders without incurring significant fees, such as those charged by Western Union and other worldwide money-transfer services.

"This is about fostering more sales within an ad to get more business from advertisers to make ads more interesting on Facebook", she said.

Is Facebook entirely in charge of Libra? The consortium is to be based in Geneva, and it's called the Libra Association. Facebook already has backing for the project from 27 organizations, including Uber, Visa, Spotify, Vodafone, Mastercard, and nonprofit Women's World Banking.

The California-based company has also created Calibra, a subsidiary which will offer digital wallets connected to messaging platforms Messenger and WhatsApp to save, send and spend Libras, which will be backed by government-backed assets.

Suntrust: "We believe this is a major initiative for Facebook, and one that has the potential of putting the company front and center in areas beyond advertising, including commerce and financial services, materially expanding its [total addressable market] and growth prospects..."

Facebook says that Libra will be a good option for people worldwide for whom "even basic financial services are still out of reach".

Yes, many. The project is already running into political opposition: French Finance Minister Bruno Le Maire has expressed concern about Libra's use in money laundering and terrorism finance.

Jon Swartz, senior tech reporter at told CTV News Channel that gaining public and regulator trust will be Facebook's biggest hurdle in launching Libra.

Before Tuesday's announcement, Facebook was already facing significant backlash over mishandling user data and not doing enough to prevent Russian interference in the 2016 U.S. presidential election.

Some have called for Facebook to face penalties, or be forcibly broken up, for mishandling user data, allowing troubling material to appear on its site and not preventing Russian interference in the 2016 United States presidential election through a social media disinformation campaign.

"Freedom, justice and money, which is exactly what we're trying to do here", he said.

But the move raised questions about how such a new money would be regulated.

The technical underpinnings of Libra are similar to that of Bitcoin, with both digital currencies relying in blockchain technology to track and verify payments. "The mission for Libra is a simple global currency and financial infrastructure that empowers billions of people".

David Marcus, the head of Facebook's cryptocurrency operation, said in a tweet Tuesday that feedback from customers has been "loud and clear" when it comes to keeping social media and financial data separate.

Since then, thousands of bitcoin alternatives have launched, and Facebook is just one of dozens of blue-chip companies dabbling with the underlying technology.

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