Facebook is all set to outline details of virtual currency to launch next year. Reportedly, Facebook is set Tuesday to show a bid to bring cryptocurrency payments into the mainstream, with the endorsement of governments and several financial giants.
As we all know that Facebook is the world’s biggest social network and is expected to outline all the details of virtual currency to launch next year that it hopes will avoid the rollercoaster volatility of blockchain technology such as bitcoin.
Facebook is also expected to set up a consortium called “Libra” which, according to the Wall Street Journal, has been joined by over a dozen companies including Mastercard, Visa, Uber, and PayPal. Reportedly, the companies with venture capitalists and telecommunications firms will invest around $10 million each into the consortium.
Facebook is trying its best to remove the hostile regulatory scrutiny after a number of privacy abuses and the spread of fake news. External management will take care of the consortium and it has to build trust among consumers by fixing the virtual coin to a basket of currencies including the dollar and euro.
Facebook has already sought out blessings from the Bank of England and the US Treasury, the BBC reported last month. Regulators have been not very revealing about cryptocurrencies, not only because of the potential abuse by criminals but also the wild swings in their value affecting consumers.
With over two billion users across all of its platforms, which include Instagram, WhatsApp, and Facebook could have the way to bring cryptocurrency out of the fringes and imitate the likes of WeChat app in China, where the US site is banned. WeChat lets users chat, shop and play games and there is no need to leave its platform, generating more revenue by offering a one-stop portal.
Libra And Privacy Issues Facebook is Facing
Strikes by the storm of privacy, chief executive of Facebook Mark Zuckerberg has promised a new direction for Facebook to build around a smaller number of groups, private messaging and payment options.
But first, it will have to overcome questions of privacy and trust, over how financial data will be stored. Some analysts are betting that the Libra consortium will eventually help to achieve that.
The initiative of crypto by Facebook will facilitate shopping, applications, and gaming, and would force its broad user base in Asia, in a research note RBC analyst Mark Mahaney said last week. “IT may prove to be one of the most important initiatives in the history of the company to unlock new engagement and revenue streams”, he wrote.
But a cryptocurrency expert at London’s Imperial College, Cathy Mulligan, said there were important questions unanswered about Facebook’s plans.
“I think there are some interesting regulatory questions that pop up: firstly, Facebook is a global company — are they creating a global currency? That is a little bit difficult to manage,” she told AFP on Monday during her visit to the UN headquarters in Geneva.
Definitions of money vary across nations, Mulligan noted.
“So how do we tax it? What implications does it have for spending money, how do you control and regulate flow?” she said, by stressing on the privacy concerns after the data mishap of Facebook.
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