Facebook is reported to be recruiting dozens of financial firms and online merchants to help launch a cryptocurrency-based payments system, dubed Project Libra, on the back of its gigantic social network.
Facebook is working on making the FaceCoin cryptocurrency
The effort, should it succeed, threatens to upend the traditional, lucrative plumbing of e-commerce and would likely be the most mainstream application yet of cryptocurrency.
At the heart of the initiative, under way for more than a year and code-named Project Libra, is a digital coin that its users could send to each other and use to make purchases both on Facebook and across the internet, according to people familiar with the matter.
Facebook’s secretive plans for a new payments system involve both investments from traditional financial firms and the potential for users to be rewarded for their activity on the platform.
Hurdles to the project are high. Cyptocurrencies have so far failed to catch on in payments. The existing system is full of entrenched interests and technology clogs. And Facebook’s battered standing with users, investors and regulators make it a delicate time to plough into new territory.
Along with Visa and Mastercard, Facebook has also reportedly talked with financial services firm First Data in order to raise about $1 billion in total as collateral for the stablecoin to buffer it against volatility.
The social media giant is also in discussions with e-commerce companies, also to raise funds, and to gain support and acceptance for the planned stablecoin, according to the report. Facebook may also pay users in the digital currency for viewing ads, as well as allow advertisers to accept the token for merchandise and subsequently pay for more ads with it.
There’s more, too. Notably, Facebook is said to be aiming to eliminate the swipe and card processing fees, generally around 2–3 percent, paid by merchants on every transaction to banks and payments processors and networks. “If it succeeds, the project threatens the card networks’ dominance over global payments,” the WSJ says.
Barclays analyst Ross Sandler recently estimated that Facebook’s cryptocurrency project could yield anywhere from $3 billion to $19 billion in additional revenue by 2021.
The firm set up its blockchain division in May 2018, purportedly to explore the technology. Since then, the company has been expanding its blockchain team with new hires. It currently has around 22 open positions related to blockchain, including legal experts, data engineers, marketing managers and more.
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