Facebook announces launch of Libra cryptocurrency to take on bitcoin

Bitcoin Climbs to One Year High on Facebook Crypto Pact ReportMore

Bitcoin's price surged above $9,000 this week as Facebook prepared to launch Libra, with some viewing the initiative as evidence that cryptocurrencies are gaining mainstream acceptance.

Facebook is leaping into the world of cryptocurrency with its own digital money, created to let people save, send or spend money as easily as firing off text messages.

"Libra will be a "stablecoin", and its value will be tied to a basket of fiat currencies (managed by the Libra Reserve) to minimize volatility", wrote the analysts - although there are concerns about user confusion/adoption.

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 U.S. presidential election through a social media disinformation campaign. The new app and currency will hope to reach a wide audience, including the many users of Facebook's services in developed countries as well as the roughly 50% of adults around the world who don't have a bank account of any kind. Facebook is taking the lead on building Libra and its underlying technology; its more than two dozen partners - including PayPal, Uber, Spotify, Visa and Mastercard - will help fund, build and govern the system. And as with any cryptocurrency, there's also the risk of hacks or other types of attacks.

"If you fast forward a number of years, consumers all over the world will have the ability to access the world economy", Facebook executive David Marcus said in an interview with The Associated Press.

Libra is the name of the new Facebook-backed currency.

The new currency is expected to be up and running in the next six to 12 months and will be run by a not-for-profit organization in Geneva, Switzerland. "We've seen this directly in numerous developing markets where we operate", explained the post.

Financial information at Calibra will be kept strictly separate from social data at Facebook and won't be used to target ads, Calibra vice president of product Kevin Weil told AFP.

The social network's revenue growth has slowed in recent years, and it's looking for new ways to make money outside of advertising. "It is frankly baffling to me that a company with a massive data privacy problem launched a non-private global currency", said Matthew Green, associate professor of computer science at the Johns Hopkins Information Security Institute in the United States, via Twitter.

For people without access to banks, local money could be swapped for Libra at traditional currency exchange houses or businesses offering such services. Anyone will be able to use Libra using other tools like credit cards by third parties.

This is not the first time Facebook has attempted to create a type of digital currency. "That's why I think the Facebook coin could be a watershed moment in crypto".

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