More than two weeks after the announcement of a new digital currency project called Libra, the Facebook chief executive on the project reiterates that the project will not be controlled by the company.
“Facebook will not control the network, the currency, or the reserve backing it,,” wrote David Marcus, head of the company’s blockchain group, in an article on Wednesday. ” Facebook will only be one among over a hundred members of the Libra Association by launch. We will not have any special rights or privileges.”
Marcus also explained that Libra’s wallet, called Calibra, would be only one of many wallets, but acknowledged that Facebook would generally gain business benefits from making it easier for people to use Facebook’s money transfer services.
The need to repeat these points only two weeks later suggests that Facebook will face a fierce battle to get people to trust them with their financial resources. It also highlights a fundamental contradiction in the project: while Facebook designed Libra under secrecy and oversaw its announcement, it intends to provide control of the encrypted currency to a group of partners. At launch, these partners include non-profit companies, credit card companies and intermediaries among others, but major financial institutions have so far been away from the project. A control transition may not be successful if Facebook can not convince partners that there is a reason to join.
It is not immediately clear why Facebook has implemented the ambitious project of designing a completely new digital currency, rather than just creating a payment system that works with Facebook products. There are many other examples of technology companies that facilitate payments, such as Apple Pay and PayPal’s Venmo, which allow people to transfer funds electronically without requiring them to convert them to and from a new type of currency.
Marcus addressed this by saying that the goal of the new digital currency is to help people who are not well served by the current banking systems, especially in developing countries.
” With Libra, anyone with a $40 smartphone and connectivity will have the ability to securely safeguard their assets, access the world economy, transact at a much lower cost, and over time access a whole range of financial services,”, Marcus declared. “We firmly believe that if Libra is successful, it can be a non-linear step change for billions of people who need it the most.”
The novelty and ambition of the idea do not seem to scare investors. Facebook has risen about 4% since the company announced the launch of its new crypto currency, Libra.