Facebook is betting that its two billion users will invest in its latest business venture—literally.
The social networking giant unveiled an ambitious plan to launch a new digital currency called Libra Tuesday, despite ongoing investigations into its privacy practices.
The effort, which Facebook is launching with partners including PayPal, Uber, Spotify, Visa and Mastercard, would allow Facebook users to buy and store their digital dollars in a Facebook-branded digital wallet called Calibra.
Here’s what Facebook users need to know about Facebook’s digital currency.
What is Libra and where will it be stored?
Libra will exist entirely in digital form. That means you won’t receive a physical note or coin when buying the currency. Libra transactions will be recorded on a blockchain—a ledger that runs across multiple computers. It’s the same technology that bitcoin and other digital currencies use.
In addition to Libra, Facebook announced a new subsidiary called Calibra, which will act as a digital wallet for the cryptocurrency. The wallet will be available in Messenger, WhatsApp, and as a standalone app, which means you won’t be required to have a Facebook account to use the currency.
Calibra will let you send Libra to “almost anyone with a smartphone” according to Facebook. The company also hopes to provide users with the ability to pay bills, buy coffee, or even ride public transit without the need to carry cash.
How is it different from other cryptocurrencies?
Bitcoin is known for its wide price fluctuations, but the price of Libra is expected to be more stable. That’s because Libra’s value will be pegged to established currencies like the Canadian dollar, the U.S. dollar, or the Euro. It will also be backed by a reserve fund, whereas bitcoin is not.
Facebook hasn’t said what assets that reserve fund will be made up of, but its white paper suggests it will include “bank deposits and government securities in currencies from stable and reputable central banks."
Is Facebook entirely in charge of Libra?
The currency will be developed by a number of partners, including MasterCard, PayPal, and Uber, belonging to the “Libra Association,” which Facebook co-founded. The association will act as a monetary authority for the digital currency.
Facebook will lead the development of building the cryptocurrency and its underlying technology, while its partners help fund, build, and govern the system.
How will I get Libra?
Facebook hasn’t gone into details about how users will be able to get their hands on the currency when it launches. But experts say Facebook’s partnership with credit card companies like MasterCard and Visa suggest users will be able to simply buy the currency.
Is it safe?
Facebook’s privacy practices have been under fire for years, but the company has faced increased scrutiny over the last few months.
In April, Canada’s federal privacy watchdog announced plans to take Facebook to court following an investigation into the platform’s privacy practices that revealed more than 620,000 Canadians had their data improperly shared during the Cambridge Analytica scandal.
David Marcus, the head of Facebook's cryptocurrency operation, said in a tweet Tuesday that feedback from customers has been "loud and clear" when it comes to keeping social media and financial data separate.
“We understand we have to earn your trust,” read his tweet.
Jon Swartz, senior tech reporter at MarketWatch.com told CTV News Channel that gaining public and regulator trust will be Facebook’s biggest hurdle in launching Libra.
“Facebook is also spending US$3 billion dollars this year just to sharpen its security and to assure us that we can trust them with our data,” Swartz said. “That’s a big problem that they have here and everywhere in the world.”
How could it benefit users?
Though Facebook hopes the technology will allow access to banking services for those in developing countries, here in Canada the cryptocurrency could help keep the cost of money transfers down.
The social network emphasized that Libra is a way to send money across borders without incurring significant fees, like those charged by money-transfer services.
When will it launch?
There is no official launch date for Facebook’s digital wallet app or cryptocurrency, nor has the company said whether it will be available globally right away.
However, Facebook has an ambitious plan to have Libra ready by 2020.
