Facebook has finally revealed the details of Project Libra, its highly ambitious plan to bring cryptocurrency to the masses. Libra, once active, will enable moving money around the world as “easily and cheaply as sending a text message”.
The main goals of Libra as highlighted in their white paper are:
- To reach the 1.7 billion people worldwide who lack access to the banking system. (31% of the current global population)
- Quicken cross-border transactions – it currently takes 3 – 5 working days to complete cross-border payments
- Reduce costs of transactions from the current 7% charge on cross-border payments
- Reduce the over dependence and usage of cash. (85% of all global transactions still use cash)
- Add $3.7 Trillion to developing economies while adding 95 Million new jobs
- Improve people’s income earning potential by 20%
- Reduce extreme poverty by 22%
Interestingly, Facebook will not fully control Libra, but rather have a single vote in its governance together with 27 other members of the Libra Association who include Uber, Andreessen Horowitz, Visa, MasterCard, PayPal, Mercy Corps, Lyft, eBay and Coinbase. These companies each paid a minimum of $10 million to join the association.
You can read the Libra white paper here.
Additionally, Facebook also announced its new subsidiary called Calibra tasked with building financial services and software on top of the Libra blockchain. The company will develop a new digital wallet, that will be available in Facebook owned apps like Messenger and WhatsApp. This digital wallet will allow users on these platforms to hold their money securely for free, and allow them to transfer it to anyone else on the planet for a fee much lower than current international money transfer rates.
Facebook’s foray into the cryptocurrency field is very interesting because it will likely be the first cryptocurrency wallet that hundreds of millions of people will have access to. With the billions of users on the Facebook ecosystem (Facebook, Facebook Messenger, Instagram and WhatsApp) potentially interacting with Calibra, it will instantaneously have many hundreds of times the user base of the world’s most popular existing digital wallets. This could drive cryptocurrencies to reach the critical masses much faster.