The world’s biggest social network, Facebook, has revealed plans to unveil a bid to bring crypto currency payments into the mainstream, reportedly with the endorsement of governments and financial giants.
It is likely to summarize details of a virtual currency launching next year that it hopes will avoid the rollercoaster volatility of “blockchain” technologies such as bitcoin.
According to the Wall Street Journal, Facebook is setting up a consortium called “Libra” which has been joined by more than a dozen companies including Visa, Mastercard, PayPal, and Uber.
The companies alongside telecommunications firms and venture capitalists will invest around $10 million each into the consortium.
As the social network has been trying to ward off hostile regulatory scrutiny after a series of privacy abuses and the spread of fake news, the consortium will be managed externally. This will seek to build trust among consumers by pegging the virtual coin to a basket of currencies including the dollar and euro.
However, regulators have been reticent about crypto currencies, not only due to potential abuse by criminals but the wild swings in their value harming consumers.
The chief executive of Facebook, Mark Zuckerberg although was knocked by the privacy storms, has promised a new direction for the application built around smaller groups, private messaging and payments.
But it will need to overcome questions of trust and privacy, not least over how financial data will be stored.
RBC analyst Mark Mahaney explained that Facebook’s crypto initiative could facilitate shopping, applications, and gaming, and would leverage its broad user base in Asia.