AP

Facebook plans its own currency for 2 billion-plus users

Jun 18, 2019, 5:23 AM
facebook...
FILE - In this Jan. 9, 2019, file photo, media and guests tour Facebook's new 130,000-square-foot offices, which occupy the top three floors of a 10-story Cambridge, Mass., building. Facebook unveiled a broad plan Tuesday, June 18, to create a new digital currency. (AP Photo/Elise Amendola, File)
(AP Photo/Elise Amendola, File)

SAN FRANCISCO (AP) — Facebook already rules daily communication for more than two billion people around the world. Now it wants its own currency, too.

The social network unveiled an ambitious plan Tuesday to create a new digital currency similar to Bitcoin for global use, one that could drive more e-commerce on its services and boost ads on its platforms.

But the effort, which Facebook is launching with partners including PayPal, Uber, Spotify, Visa and Mastercard, could also complicate matters for the beleaguered social network. Facebook is currently under federal investigation over its privacy practices, and along with other technology giants also faces a new antitrust probe in Congress .

Creating its own globe-spanning currency — one that could conceivably threaten banks, national currencies and the privacy of users — isn’t likely to dampen regulators’ interest in Facebook.

The digital currency, called Libra, is scheduled to launch sometime in the next six to 12 months. Facebook is taking the lead on building Libra and its underlying technology; its more than two dozen partners will help fund, build and govern the system. Facebook hopes to raise as much as $1 billion from existing and future partners to support the effort.

Company officials emphasized Libra as a way of sending money across borders without incurring significant fees, such as those charged by Western Union and other international money-transfer services. Libra could also open up online commerce to huge numbers of people around the world who currently don’t have bank accounts or credit cards.

“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.

Facebook also could use its own currency to drive more people to make purchases from ads on its social media sites, said Gartner analyst Avivah Litan, who based her comments on press reports about Libra that preceded Facebook’s formal announcement. “This is about fostering more sales within an ad to get more business from advertisers to make ads more interesting on Facebook,” she said.

Backing by familiar corporations might also make Libra the first Bitcoin-like currency with mass appeal. Such “cryptocurrencies” have generally failed to catch on despite a devout following among curious investors and innovators. Bitcoin itself remains shrouded in secrecy and fraud concerns, not to mention wild value fluctuations, making it unappealing for the average shopper.

Libra will be different, Facebook says, in part because its value will be pegged to a basket of established currencies such as the U.S. dollar, the euro, the yen and others. Each purchase of Libra will be backed by a reserve fund of equal value held in real-world currencies to stabilize Libra’s value.

To be sure, recent history reminds us that many big Facebook announcements never really take off. Two years ago, for instance, Facebook CEO Mark Zuckerberg promised that “augmented reality ,” in which phones and other devices project digital images into real-world surroundings, would be a major focus for the company. Such AR applications remain all but invisible today. Same goes for the online shopping chatbots that Zuckerberg unveiled a year earlier, saying they would revolutionize e-commerce in its Messenger app.

Facebook won’t run Libra directly; instead, the company and its partners are forming a nonprofit called the Libra Association, headquartered in Geneva, that will oversee the new currency and its use. The association will be regulated by Swiss financial authorities, Facebook said.

“No single company should operate this,” Marcus said. “It should be a public good.”

The company has also created a new subsidiary, Calibra, that is developing a digital wallet to allow people to buy, send and use Libra. Calibra pledges that it won’t share transaction data from details of Libra user’s financials with Facebook unless compelled to do so in criminal cases. Still, if people are using Facebook products to buy things and send money, it’s possible Facebook will be able to track some data about shopping and money transferring habits.

Calibra won’t require users to have a Facebook account to make a free wallet. And it will allow people to send Libra back and forth on two of Facebook’s core messaging apps — WhatsApp and Messenger. Instagram messages won’t be included, at least at first.

Libra partners will create incentives to get people and merchants to use the coin. That could range from Uber discounts to a Libra bonus paid when users set up a Calibra wallet, although the companies haven’t laid out specifics.

Many privacy questions remain unanswered, though. Cryptocurrencies such as Libra store all transactions on a widely distributed, encrypted “ledger” known as the blockchain. That could make the Libra blockchain a permanent record of all purchases or cash transfers every individual makes, even if they’re stored under pseudonyms rather than real names.

Facebook said that if people use Calibra or similar wallets, their individual transactions won’t be visible on the Libra blockchain.

Earlier this year, Zuckerberg announced a new privacy-focused vision for the company after months of backlash for its treatment of personal customer information. Zuckerberg’s vision — which has mostly not been detailed publicly — will rely heavily on privacy-shielded messaging apps in an attempt to make the services more about private, one-to-one connections.

Many analysts believe Zuckerberg wants to create a U.S. version of the Chinese service WeChat, which combines social networking, messaging and payments in a single app. Libra would take Facebook a step closer to that end.

Today’s Top Stories

AP

Residents stand in front of building destroyed by missiles in Ukraine...
FRANCESCA EBEL Associated Press

Russian missiles kill at least 19 in Ukraine’s Odesa region

The Ukrainian president's office said three Kh-22 missiles fired by Russian bombers struck an apartment building and a campsite.
14 hours ago
Ketanji Brown Jackson takes the oath for the Supreme Court....
MARK SHERMAN Associated Press

Jackson sworn in, becomes 1st Black woman on Supreme Court

Judge Ketanji Brown Jackson, 51, will be sworn as the court's 116th justice Thursday, just as the man she is replacing, Justice Stephen Breyer, retires.
2 days ago
The Supreme Court is pictured. The court just limited the EPA...
MARK SHERMAN Associated Press

Supreme Court limits EPA in curbing power plant emissions

The Supreme Court on Thursday limited how the nation's main anti-air pollution law can be used to reduce carbon dioxide emissions from power plants.
2 days ago
President Joe Biden speaks during a news conference on the final day of the NATO summit in Madrid, ...
DARLENE SUPERVILLE and ZEKE MILLER Associated Press

Biden says transatlantic alliance has adapted to new threats

Biden's comments came at a press conference in Madrid at the conclusion of the annual meeting of NATO leaders and after he attended a summit with the Group of Seven advanced democratic economies in the Bavarian Alps.
2 days ago
A Rite Aid logo is displayed on its store...
HALELUYA HADERO, AP Reporter

Amazon, Rite Aid cap purchase of emergency contraceptives

Retailers limiting purchases is standard practice that helps retailers prevent stockpiling and reselling at higher prices.
2 days ago
FILE - Hershel "Woody" Williams, center, the sole surviving U.S. Marine to be awarded the Medal of ...
The Associated Press

Last remaining WWII Medal of Honor recipient dies at 98

A 98-year-old man from West Virginia, who was the last Medal of Honor recipient from World War II has died.
3 days ago

Sponsored Articles

Tax Harassment...
Jordan Wilcox

The best strategies for dealing with IRS tax harassment | You have options!

Learn how to deal with IRS tax harassment. This guide will teach you how to stop IRS phone calls and letters, and how to handle an IRS audit.
spend a day at Bear Lake...
Bear Lake Convention and Visitors Bureau

You’ll love spending the day at Bear Lake | How to spend a day at Bear Lake

Bear Lake is a place that needs to be experienced. Spend a day at Bear Lake.
Curb Appeal...
Price's Guaranteed Doors

How to have the best of both worlds for your house | Home security and curb appeal

Protect your home and improve its curb appeal with the latest security solutions like beautiful garage doors and increased security systems.
Prescription opioids can be disposed of during National Prescription Take Back Day...
Know Your Script

Prescription opioid misuse | How to protect your family from the opioid epidemic

Studies have shown that prescription opioid misuse has increased since COVID-19. So what do you need to know about these opioids?
national heart month...
Intermountain Healthcare

National Heart Month: 5 Lifestyle Changes to Make Today to Keep You Heart Healthy

Heart disease is the leading cause of death for both men and women. One person dies every 36 seconds in the United States from cardiovascular disease
Joseph Smith Memorial Building...
Temple Square

The Joseph Smith Memorial Building is an icon of Salt Lake City | Why hosting an event at this beautiful location will make you a hero this year

Here's why hosting an event at the iconic Joseph Smith Memorial Building in downtown Salt Lake City will make you a hero this year.
Facebook plans its own currency for 2 billion-plus users