Facebook's ambitious and controversial plan to build a new cryptocurrency may take decades to achieve, but could have a huge impact -- if it shakes off early setbacks.
Earlier this year Facebook revealed that it was working on a new global currency based on blockchain technology, called Libra. Also planned is a cryptocurrency wallet on the same system, called Calibra, which would allow WhatsApp and Facebook Messenger users to make payments to each other using Libra. The system is due to go live next year.
"The question that has been motivating us is, can we do for money what the internet did for information? Because the financial system feels a little bit similar to what the telco system did 25-30 years ago," said Kevin Weil, VP of product at Calibra at Facebook.
"It's a relatively closed system, there are high barriers to entry, not a lot of competition, and it's expensive for people -- it's very expensive to be poor," Weil told the Web Summit tech conference in Lisbon.
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Weil said that 1.7 billion people don't have access to a bank account and store their life savings in cash in their house. Calibra will focus on remittences, he said -- cross-border payments to family and friends that total $700bn each year. Existing ways of transferring money come with an average fee of 7%, which accounts for around $50bn in fees, he said, taken from the people least able to pay them.
"Why cant we make sending money as simple as sending a text message? It shouldn't cost 7%, it should be free," Weil said.
However, he acknowledged that getting Libra off the ground is not going to be a quick project.
"This is not going to be a thing that spreads like a social network; this is going to be the work not of years, but of decades."
That cautious outlook may be due to Libra's troubled start in life. Big tech companies initially linked with the project, including Mastercard, Visa, eBay, Stripe and PayPal, have all dropped out and the project is facing scrutiny from regulators worldwide. The G7 group of countries has also warned that such global cryptocurrency projects should not be launched until the potential impact is better understood.
Most importantly, perhaps, Facebook faces the challenge of trust: can it persuade individuals to trust it with their sensitive financial data after problems like the Cambridge Analytica scandal?
According to Weil, the financial data in Calibra will stay separate from social data in Facebook so it never gets used for ad targeting. But, he acknowledged, "I bet not everybody in the audience believes me, and that's OK," adding that they could use Libra wallets created by other companies.
SEE: Facebook agrees to pay £500,000 fine over Cambridge Analytica
"The way services built on Libra will work will be much more like email: you and I don't have to collaborate on which email provider we are going to use before we send an email. These things are protocols, and Libra is the same way," Weil said.
But while Facebook wants to be just one of many organisations involved with Libra, which is open source, for now most of the code is coming from the social media giant.
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