Facebook to launch its own cryptocurrency in 2020
Image credit: Pixabay
According to the BBC, social media behemoth Facebook is planning to launch its much-anticipated cryptocurrency early next year.
Speaking at Facebook’s regular developer conference earlier this year, CEO Mark Zuckerberg commented that he believed that payment was an area in which Facebook had a role to play: “I believe it should be as easy to send money to someone as it is to send a photo,” he told developers.
Speculation that Facebook may be planning its own currency was stoked recently with rumours that Facebook was seeking to raise $1bn to fund a cryptocurrency project and was engaged in talks with transfer companies, including Western Union, Visa and Mastercard. In May, Facebook registered an entity called ‘Libra Networks’ in Geneva to “provide financial and technology services”.
In May, US Senators wrote to Zuckerberg demanding explanations about how the new currency would work and how the company plans to keep sensitive consumer data secure.
A secretive unit of the social media company has reportedly been working for more than a year to create the virtual currency (‘GlobalCoin’). Facebook plans for its more than two billion users to use GlobalCoin to transfer money to each other and to buy products and services across Facebook Inc’s major social networking platforms (Facebook, Instagram and WhatsApp) and more broadly across the internet and in the real world.
GlobalCoin will be linked to the value of the US dollar, making it a ‘stablecoin’ less vulnerable to the extreme volatility rocking Bitcoin and other popular cryptocurrencies. Users will be able to change international currencies into GlobalCoin to transfer money around the world without using a bank account.
Facebook’s cryptocurrency team is led by David Marcus, the former president of PayPal who has been Vice President of Messaging Products since 2014. Marcus has long been a supporter of cryptocurrencies and sits on the board of directors for cryptocurrency exchange Coinbase.
The BBC report said that Facebook hopes to launch GlobalCoin in a dozen countries by the first quarter of 2020.
Reports suggest that Facebook has been seeking advice from US Treasury officials and the Bank of England over its plans for GlobalCoin; it will be important for Facebook’s new financial offerings to gain regulatory approval in order to be trusted and taken seriously by users. The Financial Times reported that Facebook staff had also been speaking to Jump and DRW – high-frequency trading companies based in Chicago – and at least two major US-based cryptocurrency exchanges, Coinbase and Gemini.
Gemini was founded in 2014 by twins Cameron and Tyler Winklevoss. Last year, it became the first such exchange to get federal approval to launch a digital currency linked to the US dollar: the Gemini Dollar.
The Winklevoss twins (sometimes referred to as the ‘Winklevii’) have a long and acrimonious history with Zuckerberg. When the three men attended Harvard University together in the early 2000s, Zuckerberg co-founded Facebook and the twins swiftly accused him of stealing their idea for a social network. This notorious series of events was dramatised in David Fincher’s 2010 thriller The Social Network. The Winklevoss twins successfully sued Zuckerberg for $65m (£51m) in cash and Facebook shares, using much of their newly acquired wealth to invest in cryptocurrency.
This week, Facebook published its most recent ‘enforcement report’, which claimed that between October 2018 and March 2019 the company removed more than three billion fake accounts (normally bots created by ‘bad actors’ in massive numbers) and more than seven million posts containing hate speech, in a record for the company.
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