By Pascal Oparada
Social Media/Tech Reporter
Social media giant, Facebook, is set to release a white paper on its planned cryptocurrency launch codenamed Libra on June 18.
According to reports by TechCrunch, multiple investors were briefed on the project and the date.
Facebook’s head of Financial Services and Payment Partnerships for Northern Europe, Laura McCracken told a German magazine that the White Paper will debut this June and that the cryptocurrency would not be pegged to the dollar but to a basket of cryptocurrencies to prevent price fluctuations.
The debut of Facebook’s cryptocurrency could unlock a new era of commerce and payments for the social network. It could be used to offer low or no-fee payments between friends or remittance of earnings to families from migrant workers abroad who are often gauged by money transfer services.
Sidestepping credit card transaction fees could also allow Facebook’s cryptocurrency to offer a cheaper way to pay merchants for traditional e-commerce, or facilitate microtransactions for a la carte news articles or tipping of content creators. And a better understanding of who buys what or which brands or popular could aid Facebook in admeasurement, ranking, and targeting to amplify its core business.
Facebook will likely use the Libra codename as the public facing name for its cryptocurrency, which reports said won’t be called GlobalCoin as the BBC had claimed. Facebook has registered a company called Libra Networks in Switzerland for financial services, Reuters reported. Libra could be a play on the word LIBOR, an abbreviation for the London Inter-bank Offered Rate that’s used as a benchmark interest rate for borrowing between banks. LIBOR is for banks, while Libra is meant to be for the people.
The cryptocurrency will be a stable coin — a token designed to have a stable price to prevent discrepancies and complications due to price fluctuations during a payment or negotiation process. Facebook has spoken with financial institutions regarding contributing capital to form a $1 billion basket of multiple international fiat currencies and low-risk securities that will serve as collateral to stabilize the price of the coin, The Information reports. Facebook is working with various countries to pre-approve the rollout of the stable coin.
Facebook’s cryptocurrency will be transferrable with zero fees via Facebook products including Messenger and WhatsApp. Facebook is working with merchants to accept the token as payment and may offer sign-up bonuses. The Information also reports Facebook also wants to roll out physical devices for ATMs so users can exchange traditional assets for the cryptocurrency.
Facebook’s blockchain project is overseen by former PayPal President and VP of Facebook Messenger David Marcus. His team includes former Instagram VP of product Kevin Weil, Facebook’s former corporate head of treasury operations Sunita Parasuraman who The Information reports will oversee the token’s treasury, and many elite engineers cherrypicked from Facebook’s ranks. They’ve been working in a dedicated part of Facebook’s headquarters off-limits to other employees to boost secrecy, though the nature of the partnerships needed for the launch has led to many leaks.
Facebook is in talks to create an independent foundation to oversee its cryptocurrency, The Information reports. It’s asking companies to pay $10 million to operate a node that can validate transactions made with its cryptocurrency in exchange for a say in the governance of the token. It’s possible that node operators could benefit financially too. By introducing a level of decentralization to the governance of the project, Facebook may be able to avoid regulation related to it holding too much power over a global currency.