Facebook is planning to launch a payment system based on its crypto-currency that could be used by millions of users. As revealed by the Wall Street Journal, the system will be based on a digital currency similar to bitcoin with the difference of being stable and backed up by the government. Cryptocurrencies are usually subject to significant fluctuations.
The system could endanger credit card payments, as it doesn't have commissions (at least at this stage of the development). According to the Wall Street Journal, Facebook is recruiting financial firms and online stores to help with its project, that has been named Libra.
The idea was inspired by Telegram. The instant messaging platform recently raised $1.7 billion to develop its own currency. Following this example, Facebook is trying to raise $1 billion dollars for its initiative. It is possible that there will be an integration to instant messaging apps – such as WhatsApp, allowing users to send money in a quick and easy way.
The social network could also work on some ways to encourage people to use the new function. Facebook has not confirmed how but has revealed that many possible applications of cryptocurrencies are currently being investigated.
According to the plan, the cryptocurrency could also be used to pay ad campaigns that companies do within the network.
The project could include roughly 50 people, coordinated by David Marcus – PayPal's former president.
Summary of the most relevant takeaways from the report:
- Facebook is preparing to launch a full payments network and is currently negotiating with Visa, Mastercard, and First Data as well as with large e-commerce platforms.
- Facebook is looking for a total investment of $1 billion from these firms in order to back up its currency and make it stable.
- The new system aims at eliminating credit card fees for merchants and to avoid the fluctuations of other cryptocurrencies like bitcoin.
- Facebook is considering trying the new currency on its core engine, rewarding users for viewing ads and purchasing goods.