Facebook is expected to provide details on Tuesday of a virtual currency, or cryptocurrency, it plans to launch next year.
The plan is to make cryptocurrency payments mainstream, with the endorsement of governments and financial giants, Agence-France Presse reported.
According to the Wall Street Journal, Facebook is setting up a consortium called “Libra” along with more than a dozen companies, including Visa, Mastercard, PayPal and Uber. Each company will invest about $10 million on the project.
Mark Mahaney, a Wall Street Analyst at RBC Capital, said in a research note last week that the new currency “may prove to be one of the most important initiatives in the history of the company to unlock new engagement and revenue streams.”
Facebook said it hopes the currency, dubbed GlobalCoin, will avoid the rollercoaster volatility of “blockchain” technologies such as bitcoin.
The company’s 2.4 billion monthly users will be able to change dollars and other international currencies into its digital coins, which can be used on the internet.
Cryptocurrencies, such as bitcoin, employ encryption techniques to regulate the generation of units of currency and verify the transfer of funds. Decentralized, they operating independently of a central bank.
The BBC reported Facebook CEO Mark Zuckerberg met in April with the governor of the Bank of England, Mark Carney, to discuss the proposal.
Zuckerberg also has met with U.S. Treasury officials and money-transfer firms, including Western Union.
“Payments is one of the areas where we have an opportunity to make it a lot easier,” Zuckerberg told Facebook’s developer conference in April. “I believe it should be as easy to send money to someone as it is to send a photo.”
The Guardian reported Facebook will peg the currency’s value to a basket of established currencies, including the U.S. dollar, the euro and the Japanese yen.
The paper said Facebook will face regulatory issues, noting the social media platform is not regulated in the same way banks and the cryptocurrency industry are.
And Facebook has a poor track record on data privacy and protection. The company admitted that the data of up to 87 million Facebook users had been used by the political opposition group Cambridge Analytica to target ads for Donald Trump in the 2016 presidential election.
The U.S. Senate committee on banking earlier this month wrote an open letter to Zuckerberg with many questions. The lawmakers want the CEO to explain how the currency would work, how the data would be secured and what consumer protection would be offered.
In an interview with WND, futurist George Gilder, the author of “Life After Google,” explained how digital currency will function in a developing internet architecture called the “cryptocosm.”
He said the cryptocosm, currently represented by emerging “blockchain” technologies such as bitcoin, would allow news outlets, for example, to control their own content. The content would be sold directly to customers through arrangements such as “micropayments,” which he described as a “hassle-free way of collecting tiny amounts of money for tiny goods and services.”
“That makes it possible for you to escape the centralization of a walled garden that collects all the money,” he said.
Gilder said it would “bring pricing to bear on many transactions that currently are avoided” while providing security.
It might look like a small, automatic payment every time someone clicks on an article.
“The blockchain allows you to assign property rights to various facets of any content, including works of art,” he explained.