Facebook is branching out from its core social media offering yet again. It has been rumored for a while that the big blue social network has been working on its very own cryptocurrency and Facebook made the plan official today. The launch of Facebook’s virtual currency will be unlike other cryptocurrencies as the company has reportedly signed deals with some of the world’s leading financial institutions, who’ll back Facebook’s new crypto-coin, Libra. You’ll keep your Libra in a digital wallet app called Calibra.
According to a report by the Wall Street Journal, Facebook’s crypto-coin will receive around $10 million worth of investment from each of more than a dozen major backers. Facebook plans to use the funds, which will total over $100 million, to assist in the development of the coin as well as the infrastructure needed to support it and the blockchain technology it will need.
Rumors around Facebook’s virtual coin had been swirling for months. The coin first hit the news in December and the BBC reported in May that Facebook is planning to launch the crypto-coin in the first quarter of 2020 and that at the time Zuckerberg and his company had already signed up at least 12 countries where Facebook users could use the cryptocurrency as a digital payment. It was also reported in May that Facebook had set up a financial services company in Switzerland.
Why is Facebook making a crypto-coin?
Facebook wants to create an affordable and secure way for Facebook, WhatsApp, and Instagram users to make and send payments, even if they don’t have a bank account. With smartphones putting Facebook into the hands of billions of users around the world, who wouldn’t otherwise have access to a PC, more and more Facebook users don’t have access to things most of us take for granted. Making a card payment online is impossible to many and Facebook is working on a way to allow these users to buy things both on Facebook or through third-party partners, and send money to other users across Facebook, Instagram, and WhatsApp.
It isn’t just for users without bank accounts, however. Fintech companies that offer online banking services via apps, like Revolut, have been winning lots of customers recently, and it seems Facebook wants a part of the action. We all like it when apps make things easier and they’ve been making banking easier for some time now. With its new cryptocurrency, Facebook is trying to bring together the ease of use offered by these new types of banking apps and the security that comes with cryptocurrencies stored on the blockchain.
The fact that Facebook now has major backing for its new coin puts it in a very strong position. Cryptocurrencies are famous for being unstable in value but with major financial backers and a number of nations behind it, Facebook’s Libra has a very solid foundation indeed.
