Facebook announced today a new digital wallet for a new digital currency. It is currently in a test phase and will launch live in 2020. Here is how Facebook explains the launch in its announcement release:
“Today we’re sharing plans for Calibra, a newly formed Facebook subsidiary whose goal is to provide financial services that will let people access and participate in the Libra network. The first product Calibra will introduce is a digital wallet for Libra, a new global currency powered by blockchain technology. The wallet will be available in Messenger, WhatsApp and as a standalone app — and we expect to launch in 2020.”
“From the beginning, Calibra will let you send Libra to almost anyone with a smartphone, as easily and instantly as you might send a text message and at low to no cost. And, in time, we hope to offer additional services for people and businesses, like paying bills with the push of a button, buying a cup of coffee with the scan of a code or riding your local public transit without needing to carry cash or a metro pass.”
David Marcus, head of Facebook’s Calibra, discusses the details of Facebook’s entry into cryptocurrency in an interview on CNBC:
This Is Designed From the Ground Up To Be a Great Medium Of Exchange
If you want to compare Libra with traditional cryptocurrencies the first big difference is that typically they are investment vehicles or investment assets rather than being great mediums of exchange. This is really designed from the ground up to be a great medium of exchange. Libra is a very high-quality form of digital money that you can use for everyday payments and cross-border payments, microtransactions and all kinds of different things.
There are a lot of issues that need to be solved. If you were to get out of the studio right now and ask anyone to send ten dollars on their mobile phones to Canada, they probably wouldn’t know where to start. This is 30 years after the web was invented and mobile broadband is available to so many people. We felt that it was time to try something new and this is the beginning of a long journey to launching this new network in this new digital currency.
When You Can Move More Value Around Profound Changes Might Happen
We are privileged. We live in a country that has a very stable currency and has very trusted institutions, easy ways to pay each other on mobile devices. That’s actually not the case for many people around the world. Definitely, cross-border payments are still very hard and very expensive. They cost an average of seven percent to send across one border. They sometimes take three or four days to clear. It is a very cumbersome and expensive process for many people around the world. If you think about it from a use case, cross-border payments are definitely going to be a primary use case.
But when you think about the effect that having an internet of value exists, or protocol for money on top of the existing internet, and all of the things that can be built on top of a low-cost system. Microtransactions are things that we’ve been talking about for decades and haven’t materialized because the amounts we are trying to transact are actually lower than the transaction fees. When all of these things change and you can move value around the Internet in a really easy way I think profound changes might happen.
There’s Never Been a Better Moment For Us To Do This
I have a slightly contrarian view on this (trust). I don’t think there’s ever been a better moment for us to do this because of the way we’re doing it. We’re actually going to launch this new blockchain at some point next year. We’ve launched a test net today that people can start experimenting with. This new blockchain is actually going to be decentralized and run by the members of an association.
We’re just going to be one among many to govern over this new network and currency. When you look at how much effort we’ve put to limit our influence and limit our control over this network I think it’s a new way of operating. We don’t have control over the network and we don’t have control over the currency. What we have control over is going to be the wallets that are going to operate within Facebook and on top of the network.
We Aren’t Going To Be the Defacto Wallet
We aren’t going to be the defacto wallet. There will be plenty of competition. To earn people’s trust we are going to have to make strong commitments notably on privacy, ensuring that financial data and social data never get commingled and really earn people’s trust over very long periods of time. There are going to be a number of wallets that are going to compete with us on the network we helped create.