Facebook recently unveiled a plan to create an alternative financial system that relies on cryptocurrency. Allegedly, the company has been secretly working on the plan for more than a year.
27 partners as diverse as Mastercard and Uber, could face immediate skepticism from people who question the usefulness of cryptocurrencies. Also, other companies are wary of the power already accumulated by the social media company.
The cryptocurrency, called Libra, will also have to overcome concern that Facebook does not effectively protect the private information of its users. That’s in a way a fundamental task for a bank or anyone handling financial transactions.
Facebook hopes to begin next year with 100 partners, should the project come together.
That would be the most far-reaching attempt by a mainstream company to jump into the world of cryptocurrencies.
Cryptocurrencies are best known for speculative investments through digital tokens like Bitcoin and outside-the-law e-commerce, like buying medicine online.
Improving the privacy of users will make it harder for Facebook to show them ads specific to their interests. A virtual financial network would be a way for the company to find new revenue if ad sales should drop.
The payment system would also help Facebook and other American companies compete for financial transactions in developing countries. Companies including Visa, Spotify, eBay and PayPal, are on the list of partners mentioned before. So far they have not committed to much beyond donating money and taking part in the design of the association and the currency. Each enterprise partner will be expected to invest at least $10 million.