After years of rumor and speculation, social networking giant Facebook recently confirmed that it will be launching its own cryptocurrency-based payment system in the first quarter of 2020. While few facts about the project have been made public, many interesting details have leaked out in recent weeks as Facebook representatives unveiled their plans in meetings with public officials and private partners. Even the cryptocurrency’s official name is still being kept secret, although the BBC has reported that the project has been called both “GlobalCoin” and “Project Libra” internally.
In this post, we’ll examine the five biggest, most concrete details we’ve learned about Facebook’s potentially game-changing crypto token.
1. GlobalCoin has been in the works since at least 2017. In December of 2017, David Marcus, the former President of PayPal and then Facebook’s Vice President of Messaging Products, joined the Board of Directors at Coinbase. By mid-2018, Marcus has stepped down from that position to lead a blockchain-focused project within Facebook itself. According to CoinDesk, this move was done in part “to avoid the appearance of a conflict of interest” with Coinbase.
2. Facebook’s token is designed to be a “stablecoin.” Investors don’t like risk, and cryptocurrencies are notoriously volatile investments. According to a 2018 Bloomberg report, Facebook’s then-rumored token would be designed as a so-called stablecoin, pegged directly to the value of another asset (presumably the dollar). Even though stablecoins have a mixed track record, Facebook’s shareholders and partners might breathe easier knowing that the new token will be at least somewhat protected from the ups and downs of standard crypto trading.
3. GlobalCoin is almost certainly the reason Facebook bought Chainspace. In February of 2019, Facebook purchased London-based blockchain development firm for an undisclosed sum. The company was founding with the intention of building smart contract software, but shortly after their acquisition by Facebook, Chainspace announced that they were “moving on to something new.”
4. Facebook has major partnerships in the works. According to various reports, Facebook has been in discussions with Coinbase, Western Union, the Bank of England, VISA, and many, many other financial institutions in recent months. One of the most surprising of these is Gemini, the New York-based cryptocurrency exchange founded by Tyler and Cameron Winklevoss. In 2004, the Winklevoss twins sued Facebook founder Mark Zuckerberg over claims that he stole their social networking concept. Zuckerberg settled the suit for $65 million, and the twins went on to become extremely successful venture capitalists specializing in cryptocurrency and blockchain startups.
5. “Project Libra” is expected to launch in at least dozen countries in 2020. Unfortunately, there’s little indication of which countries will be included in that launch. The project’s legal entity, Libra Networks, is based in Switzerland, making that famously investor friendly country a likely candidate. Due to regulatory uncertainty, it’s entirely possible that the U.S. — Facebook’s home country — will not be on that initial launch list.
The impact of a Facebook-backed token on the greater cryptocurrency market is almost impossible to predict. As one of the largest technology companies in the world — not to mention owning hugely popular apps like WhatsApp and Instagram — Facebook has the resources and market legitimacy to completely shift public perception about the value and utility of cryptocurrencies. At the same time, Facebook’s currently shaky relationship with regulators could bring unwelcome attention to the already oversight-adverse cryptocurrency market.
We’ll find out soon enough, as Facebook is rumored to release official details about their new cryptocurrency this summer.