Unlike traditional money cryptocurrencies are not backed by any government but can be used to pay for goods and services online.
Facebook said it has linked with 28 partners to form Libra Association, a Geneva-based entity governing its new digital coin, which it will launch in the first half of 2020, according to marketing materials and interviews with executives.
The company has also created Calibra, a subsidiary which will offer digital wallets connected to messaging platforms Messenger and WhatsApp to save, send and spend Libras, which will be backed by government-backed assets.
Facebook is betting it can squeeze revenue out of its messaging services through transactions and payments, something that already happens on Chinese social media apps like WeChat.
“Combining transaction data from the Calibra app with the social data that Facebook, WhatsApp and Instagram has, that’s where the treasure trove is,” said Teunis Brosens, ING Group’s lead economist for digital finance and regulation.
“And that’s where the questions emerge.”
Consumer privacy concerns or regulatory barriers may present significant hurdles, he warned.
Neil Campling, Head of TMT Research at Mirabaud Securities in London said in a note: “Given its history of managing our data, it shouldn’t take much to convince people that Facebook managing our money is probably a terrible idea.”