Issue link: https://maltatoday.uberflip.com/i/1132126
20.06.19 6 FOREIGN NEWS FACEBOOK revealed its long-awaited cryptocurrency plans Tuesday, announcing "Project Libra," a new type of digital money designed for the billions of people using its apps and social network. If the plan is successful, us- ers will soon be able to shop with and send the currency— known as Libra—on Messen- ger and Instagram, as well as use it with a wide variety of other merchants like Uber, Spotify, and MasterCard. Facebook did not provide specifics about exactly when and how consumers will get ahold of the currency, but ex- ecutives suggest it will first be distributed on Messenger and WhatsApp in mid-2020. In addition, the company also announced a new digital wallet called Calibra, which will be operated by Facebook as a separate subsidiary and provide users with a way to store and spend Libra. e digital wallet, which won't be available to the pub- lic for months, will display the value of users' Libra in their local currency and provide a design similar to popular dig- ital wallet Venmo for transfer- ring money. Facebook provided an image of Calibra's design—includ- ing a three-wave symbol that serves as the Libra's equivalent of a dollar sign. According to David Marcus, a former PayPal executive who is leading Project Libra for Facebook, one of the initia- tive's main goals is to reach the 1.7 billion people worldwide who lack access to the banking system. "It's an anomaly that the In- ternet has no protocol for money," Marcus tells Fortune, adding that Project Libra will also provide more compe- tition in financial services, along with increasing access to capital. Setting the foundation While Facebook has been driving the project, the com- pany is framing its role as one member of a federation of dozens of companies and non-profit organizations that will together manage the cur- rency through a Swiss foun- dation. Corporate members of the organization, known as the Libra Foundation, will be required to contribute a min- imum of $10 million to help the currency gain traction, an effort that will likely see users receive a small amount of Li- bra to test it out. Initial members of the foun- dation are Facebook and 27 other partners, including Visa, MasterCard, PayPal, Coin- base, and venture capital firms like Andreesen Horowitz and Union Square Ventures. Marcus hopes as many as 100 partners will be onboard by the time the currency debuts, by which time the group will have crafted a formal charter that sets out voting rights and other rules. e Libra blockchain—like other blockchains—will pro- vide a tamper-proof record of transactions on the network. But, unlike Bitcoin and other public blockchains, only au- thorized bodies—in this case, foundation members—will be allowed to run a node. In addition, members will also maintain the supply of Li- bra in response to demand— meaning they will issue new Libra as needed, and destroy the digital currency when peo- ple redeem them. Members are also required to support a reserve fund to keep the value of the currency sta- ble. In order to avoid the no- torious volatility of cryptocur- rencies like Bitcoin, each unit of Libra will be backed one- to-one in a basket consisting of dollars, pounds, euros, and Swiss francs. An uncertain gambit Project Libra's roll-out comes as Facebook faces unprece- dented scrutiny from regula- tors, and is battling to regain users' trust after a series of privacy scandals. e currency's blockchain, which is open source, will be programmed in a new lan- guage developed by Facebook called Move. It will not only serve as a transaction record, but pro- vide what one partner de- scribes as an "innovation lay- er" that invites third parties to build smart contracts and oth- er blockchain-based services. In launching the currency, Facebook appears to be bet- ting that customers will treat it as a financial service. Accord- ing to the Libra Association's head of policy, Dante Dispar- te, customers in the U.S. will be subject to so-called "know your customer" requirements, meaning they will have to pro- vide detailed personal infor- mation to use the service. This raises the question of why Facebook is leading Pro- ject Libra in the first place. Based on conversations with Facebook executives, the company appears to see an opportunity to cut into the remittance market by offering users an easy, low-cost way to transfer funds across borders. Disparte noted, in particu- lar, that many low-income people already use WhatsApp to photograph receipts as part of a process to collect re- mittances from local money changers. He says this project could be expedited enormously by building the ability to trans- fer money—in the form of Li- bra—directly into WhatsApp. e new service also pro- vides Facebook with new op- portunities for advertising and e-commerce. Notably, the company could display ads on WhatsApp and Instagram and invite people to pay directly for goods and services within the app using Libra. In doing so, Facebook would be able to glean new data about its users' shopping be- haviors—and how to better target them—potentially gen- erating more revenue through advertising. Such opportunities are fraught, however, given Face- book's poor reputation with user privacy and has already led skeptics on Twitter to dub the new Libra currency "Pan- opticoin"—suggesting that it could give Facebook and its partners new ways to track us- ers online. For its part, Facebook states Facebook's cryptocurrency is its greatest gambit