According to the Wall Street Journal (WSJ), Facebook’s soon to be released cryptocurrency project, dubbed Libra, has drawn massive investment from some notable companies. Payment companies Visa and Mastercard, as well as transportation network company Uber, are reportedly in for around $10 million each.
Libra is due to be announced next week, following months of secrecy and speculation, with the product expecting to come into effect next year. The Facebook coin, or GlobalCoin, is expected to be a stablecoin tied to several major currencies and is also being lined up for usage in Facebook-owned messaging app, Whatsapp.
While there has been no confirmation from any of the companies mentioned above, or Facebook, about this investment, the WSJ quotes sources close to the project. They say that the firms from several different sectors, including finance, e-commerce, venture capital, and telecoms industries have each invested around $10 million in a consortium that will govern the coin.
This consortium of investors is still fluid in its makeup with the WSJ’s sources saying that the talks are ongoing and that the final list of investors may change. However, the report maintains that the consortium is known as the ‘Libra Association.’
While a lot of information has made its way out into the public about the nature of the Facebook cryptocurrency, there is still a lot of mystery as to how it will be run and governed. The sources state that neither Facebook nor individual consortium members will control the cryptocurrency. However, there could be cases where some members could operate nodes on the network that underlies the crypto payments network.
Many are seeing this entry by Facebook into the cryptocurrency market as a massive step for the nascent technology. It represents one of the biggest tech companies globally backing a digital blockchain-based digital currency. This immediately opens the doors onto cryptocurrencies for billions of users.
It may explain the rush from said investors, as well as the reports that fintech firm Stripe, travel reservations site Booking.com and e-commerce site MercadoLibre have all signed on to the project.
Facebook’s digital currency will no doubt be integrated into the social media platform, allowing users to operate with a digital currency with ease, and across borders. But more so, it could also be integrated into its three wholly-owned apps — WhatsApp, Messenger, and Instagram — bringing its cryptocurrency potential exposure to a combined 2.7 billion users each month.
Legitimizing the space
There was a big push in 2018, and through to this year, for enterprises to find uses for blockchain technology. It has come off the back of 2017, which was a year full of hype around cryptocurrencies.
Because of this hype and speculation, cryptocurrency became a bit of a dirty word as the significant enterprises preferred to rather mull permissioned blockchains and packable enterprise blockchain solutions.
Facebook’s decision to embrace a blockchain-based digital currency will be a massive step in legitimizing that other half of the blockchain ecosystem. No doubt there will be a considerable difference between the likes of Bitcoin and Facebook’s coin, but the hope will be that this experiment proves that when over 2 billion people are using cryptocurrencies, there is a niche it can fill.