Facebook, Inc. Common Stock (NASDAQ:FB) stock rose 1.84% in pre-market trade on Tuesday. Finally, Facebook Inc unveiled an ambitious plan on Tuesday, that aims to create an alternative financial system, that depends on a cryptocurrency that the company has been secretly working on for more than a year.
The cryptocurrency by Facebook called Libra, will also aim to overcome the user concern that Facebook, Inc. Common Stock (NASDAQ:FB) is not capable to protect the private information effectively, which is a fundamental task for any bank or anyone who is handling a financial transactions.
The social media company has sky-high hopes relating to the success of Libra, as it believes that it could become foundation for a new financial system, which would not be controlled by today’s power brokers, on the Wall Street or central banks.
A head of Facebook’s blockchain technology research David Marcus, said in an interview, “It feels like it is time for a better system,” “This is something that could be a profound change for the entire world.”
Ahead of the unveiling of their project, Mr. Marcus and other Facebook executives have also conducted press interviews at the historic San Francisco Mint, in a nearly 150-year-old building that once housed one-third of United States gold reserve.
Facebook’s chief executive Mark Zuckerberg, has discussed his fascination regarding the implication of cryptocurrencies in recent years. Zukerberd has also promised to offer users the better privacy, over the last few months, on Facebook Inc (FB)-owned services like Facebook, Instagram and WhatsApp.
“Your financial data will never be used to target ads on Facebook,” said Kevin Weil, vice president of product for Calibra.
If the project Libra, which Facebook hopes to start in next year with 100 partners, should come together then it would be most far-reaching attempt, by a mainstream company like Facebook to jump into the new world of cryptocurrencies, that is best known for speculative investments through the digital tokens like Bitcoin and the outside-the-law e-commerce, like buying drugs online.
The virtual currency itself is being built, so that any software developer around the world can build a digital wallet, or any other services on top of it, that resembles to the way that Bitcoin can be sent between many people.
Based on the blockchain technology, the structure of the new Libra currency is made famous by Bitcoin.
The blockchain concept makes it possible to hold and move digital currencies almost instantly, usually with low transaction fees. Because blockchains are shared databases, they can function without any central operator like the central banks that have historically governed currencies. This structure will allow Libra to be overseen by many companies.
“Libra has the potential to bridge the gap between traditional financial networks and new digital currency technology while reducing the costs for everyone — especially consumers,” Peter Hazlehurst, head of payments and risk at Uber, said in a statement.
“Success will mean that a person working abroad has a fast and simple way to send money to family back home, and a college student can pay their rent as easily as they can buy a coffee” Facebook writes in its Libra documentation. That would be a big improvement on today, when you’re stuck paying rent in insecure checks while exploitative remittance services like charge an average of 7% to send money abroad, taking $50 billion from users annually. Libra could also power tiny microtransactions worth just a few cents that are infeasible with credit card fees attached, or replace your pre-paid transit pass.
…Or it could globally ignored by consumers who see it as too much hassle for too little reward, or too unfamiliar and limited in use to pull them into the modern financial landscape. Facebook has built a reputation for over-engineered, underused products. It will need all the help it can get if wants to replace what’s already in our pockets.