Facebook has finally announced that it will be releasing a new digital wallet and cryptocurrency next year. It had been speculated that Facebook was planning to launch a cryptocurrency but the firm had not officially announced anything. Facebook, via it subsidiary Calibra, hopes to launch the Calibra wallet as a standalone app and make the Libra cryptocurrency available in Messenger and WhatsApp too.
In the announcement, the company pointed out that basic financial services such as banks were out of reach for almost half of the adults in the world. It predicted from this that about 70% of small businesses in developing countries don’t have access to credit, making it hard for them to expand their business. It also cited UNESCO which predicts that $25 billion is lost in remittance fees by migrants every year when they send money back to their home countries to support their families.
Economists and other public figures have been stating for years now, ever since the emergence of bitcoin, that blockchain technology will be revolutionary. Until now, the technology has been largely utilised by independent cryptocurrencies such as bitcoin and ethereum, and getting them into the hands of non-technical people and businesses can be difficult so their traction is limited. With Libra, Facebook is bolting the technology onto services people already use so adoption will be a lot simpler; it also offers big perks over alternative solutions such as PayPal which charge noticeable fees.
While Libra will already have lots of users at launch, it could also mean that people come to be highly dependent on the Facebook-owned service. That could be quite worrying news for those that are concerned with the frequently occurring scandals that involve the company.
Facebook says that at launch, Calibra will come with strong protection mechanisms to keep your money and information secure. It will use the same verification and anti-fraud processes as banks and will use automated systems to detect and prevent fraud. If someone gains access to your account and steals some Libra, Facebook promises it’ll refund you.
Discussing the data shared between Calibra and other Facebook services, the firm said:
“We’ll also take steps to protect your privacy. Aside from limited cases, Calibra will not share account information or financial data with Facebook or any third party without customer consent. This means Calibra customers’ account information and financial data will not be used to improve ad targeting on the Facebook family of products. The limited cases where this data may be shared reflect our need to keep people safe, comply with the law and provide basic functionality to the people who use Calibra. Calibra will use Facebook data to comply with the law, secure customers’ accounts, mitigate risk and prevent criminal activity.”
The company is still in the early stages of developing the software and during the process it’ll consult with experts to deliver a safe, private, and easy to use product. It has also been noted that the aforementioned ‘forward-looking statements’ regarding the product may not be entirely accurate since the actual release phase is still a while off.
Once finished, Facebook imagines you’ll be able to transfer money across the world and make payments to people and businesses at low to no cost, not only helping revolutionise finance, but also, potentially, creating a dependency on Facebook.