Facebook is partnering with 27 companies in an effort to create a financial system that relies on a cryptocurrency called Libra.
The social media giant plans to begin its cryptocurrency program — which has been in the works for months — by 2020. Facebook is also expected to have 100 partners by that time, The New York Times reported Tuesday.
Partners include Mastercard, Visa, Uber, Spotify, eBay and Paypal, which are all expected to make investments of $10 million.
The program will allow users to send money to their contacts, even those who live in different countries, through a regulated subsidiary called Calibra in a matter of seconds. Libra, which defines itself as “a simple global currency and financial infrastructure that empowers billions of people,” will also be backed by federal currencies so its value will not fluctuate any more than the money we use today.
“It feels like it is time for a better system,” David Marcus, head of Facebook’s blockchain technology research, told the NYT. “This is something that could be a profound change for the entire world.”
But in attempting to jumpstart this change, Facebook will likely be challenged with state cryptocurrency regulations that have slowed the progress of other cryptocurrencies like Bitcoin.
Bitcoin’s value almost quadrupled in 2017, sparking the interests of not only average Americans and investors but U.S. banks and the government. Because such a currency does not have a central authority and cannot be tracked, it has become a useful form of payment for criminals involved in drug and human trafficking, among other felonies.
While the Federal Government has yet to regulate cryptocurrency due to its blurry design between being a security and a commodity, Congress has cracked down on Facebook for putting the privacy of its users at risk by sharing information with advertisers so ads could be targetted. A combination of the two will be an effort neither Congress nor Big Tech has tackled before.
Since Facebook’s and Libra’s partnership announcement Tuesday morning, Bitcoin’s value went up 12%, trading at about $9,190, the Wall Street Journal reported.
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