Facebook is developing a brand new cryptocurrency payments plan, known internally as “Project Libra”, and recruiting dozens of financial firms and e-commerce companies to support the initiative, the Wall Street Journal reports.
The company has been in talks with payment networks Visa and Mastercard and payments processor First Data, indicating that its cryptocurrency-based payments network would cover various usages, rather than just remittances as previous reports have suggested.
The project, according to Bloomberg, features a “stablecoin” for money transfers over its WhatsApp messaging service. It is underpinned by blockchain technology and pegged to the US dollar.
Unlike other cryptocurrencies, stablecoin is pegged to real-world assets with set prices – such as other currencies, oil, etc. – to help combat price volatility.
According to WSJ, the social media giant is seeking up to US$1 billion in investments from financial and e-commerce firms, which would serve as collateral to back the stablecoin associated with the payments network, allowing the tokens to be 100 percent backed by their represented currencies. This means each token can always be redeemed for its exact value in fiat currency.
Facebook is also looking at rewarding users for viewing advertisements via its social network and purchasing goods, similar to a loyalty point rewards scheme, the report said.
The company has been recruiting e-commerce companies to accept Facebook currency. It may also embed its payment system in third-party websites and apps, similar to how third parties use the Facebook log-in today.
The New York Times reported in February that Facebook has been in talks with exchanges about potentially listing a cryptocurrency and that the company expects to launch the product in the first half of 2019.
“Facebook is looking at pegging the value of its coin to a basket of different foreign currencies, rather than just the dollar,” the report said. “Facebook could guarantee the value of the coin by backing every coin with a set number of dollars, euros and other national currencies held in Facebook bank accounts.”
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