Facebook is finalizing plans of launching its own cryptocurrency in 2020 with the pilot set up of the digital payment system to be rolled out in several countries.
Facebook wants to begin testing the cryptocurrency, dubbed GlobalCoin by the end of 2019 and is expected to reveal its plans in detail later this year.
According to Facebook’s CEO, Mark Zuckerberg, he met the governor of Bank of England, Mark Carney in April to discuss the risks and opportunities involved in launching a cryptocurrency.
Zuckerberg has also sought expert advice on operational and regulatory issues from officials at the US Treasury.
Consequently, Facebook is in talks with money transfer companies like Western Union as it finds cheaper and faster ways for people without a bank account to send and receive money.
How Will Facebook’s GlobalCoin Work?
Facebook’s cryptocurrency is aimed at providing secure ways of making payments regardless of whether one has a bank account or not.
The company is hoping for a major disruption of the existing networks and is looking to disintegrate financial barriers competing with other financial institutions and cutting down on the consumer costs.
With inception form a foundation nicknamed Project Libra, Facebook will partner with banks and brokers that will allow users to change dollars and other international currencies into its digital coins.
A small group of co-founders is expected to launch the Swiss-based association in the coming weeks.
Meanwhile, there are reports that Facebook is also holding talks with several e-commerce merchants to accept the currency as a form of payment in return for lower transactional fees.
But amidst challenges the company faces in terms of personal data security, Facebook hopes it will be a success.
It is believed that Facebook and its partners want to prevent wild swings in the coin’s value by pegging it to a basket of established currencies, including the US dollar, euro, and Japanese yen.
This will be the second time Facebook is trying a digital currency. In 2009, the firm introduced Facebook Credits, a virtual currency that enabled people to purchase items in apps on the social networking site, but ended the project after less than two years after it failed to progress.
Nonetheless, the new cryptocurrency might gain traction longer as soon as Facebook is done with navigating a myriad of regulations in the countries it will launch the product and when the reception among the people is positive.
Also, whether Facebook’s cryptocurrency, GlobalCoin works is largely dependent on Blockchain technology. This is the technology that underpins digital currencies and it helps save time and the cost of sending money borders by bypassing banking networks.
Currently, around 30 million people worldwide use crypto-currencies. With Facebook claiming about 2.4 billion users every month, GlobaCoin could just be one hell of historical success.