Facebook to 'print even more money' with Libra cryptocurrency, Citi says

PARIS FRANCE- MAY 24 Facebook's founder and CEO Mark Zuckerberg speaks to participants during the Viva Technologie show at Parc des Expositions Porte de Versailles

The antisocial network's blockchain-tracked currency, Libra, will reside in a digital wallet named for the company's newly formed financial services subsidiary Calibra. "The cost of that exclusion is high - for example, approximately 70 percent of small businesses in developing countries lack access to credit, and $25 billion is lost by migrants every year through remittance fees". Calibra will launch its own digital wallet, sure, but it's also going to be built into Messenger and WhatsApp.

"Backed by a basket of fiat currency-denominated assets in its initial release, Libra represents a first attempt at creating a world currency, on-chain or not, with everyday usage by billions of individuals and institutions across the globe".

Kevin Weil, who runs product for the Libra initiative, said Facebook hopes it can bring global regulators to the table by publicizing its plan. "Tencent's WeChat, the giant social network in China, already has a digital wallet", NPR's Aarti Shahani reports. In Kenya, there's M-Pesa.

A US regulatory source briefed on the matter said Facebook had been in communication with USA regulators but added it was still unclear how the currency would be structured and whether it would directly fall under any existing USA regulatory regimes. "The largest user base is India".

Facebook also faces another hurdle in the trust department: Critics say it already has too much power - and doesn't do enough to protect its users' privacy. That's a departure from bitcoin and other virtual currencies whose value can fluctuate wildly.

Security measures aside, the move comes at a delicate time for Facebook, which is in the cross-hairs of regulators in the USA and Europe over its allegedly anti-competitive behavior, its use of data and the policing of its platform. Earlier this year, United Kingdom lawmakers said the company behaved like "digital gangsters".

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Calibra also won't share account or financial information for Facebook, aside from limited cases. Facebook says that Calibra will not share account information or financial data with its servers or any third party without customer consent.

The new digital currency could also open up new markets to media companies.

For the digital currency to operate on a global scale, Libra is relying on a platform of blockchain technology that uses about 100 trusted computer "nodes" to validate and register transactions.

Each of those founding companies is paying at least $10 million into the currency's reserve.

Libra learned from the many other cryptocurrencies that have preceded it such as bitcoin and is created to avoid the roller-coaster valuations that have attracted speculation and caused ruin. Calibra will be a subsidiary of Facebook, while Libra will be governed by the Libra Association, an organization comprised of a number of different companies (including Facebook and Calibra) that's headquartered in Geneva, Switzerland.

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