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. (RELATED: Meet The Conservatives Who Don’t Want To Regulate Big Tech)
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 used 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.
The federal government has yet to regulate cryptocurrency due to its blurry design between being a security and a commodity, but Congress has cracked down on Facebook for putting the privacy of its users at risk by sharing information with advertisers so ads could be targeted. A combination of the two will be an effort neither Congress nor big tech has tackled before. (RELATED: Did Russian Facebook Ads Actually Have Any Effect On The 2016 Presidential Election?)
Bitcoin’s value went up 12%, trading at about $9,190, since Facebook’s and Libra’s partnership announcement Tuesday morning, the Wall Street Journal reported.
Spotify Chief Premium Business Officer Alex Norström said a challenge for Spotify and its users “has been the lack of easily accessible payment systems, especially for those in financially underserved markets,” which it hopes Libra will change.
Visa said it decided to invest in Libra because “digital currencies like Libra could provide new pathways out of cash-dependence and accelerate the journey of the estimated 1.7 billion unbanked consumers into the formal financial system.”
eBay Vice President of Global Payment, Billing and Risk Alyssa Cutright said “eBay is committed to supporting emerging technologies that have the potential to expand global e-commerce and make it more affordable for people across the world. In these pioneering days of cryptocurrency and blockchain, we are excited to be at the forefront of development, testing, and learning in our role as a Founding Member of the Libra Association.”
PayPal, Uber and Mastercard did not respond for comment in time for publication.
Editor’s note: This post has been updated to include comments from Visa and Spotify.
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