Facebook's crypto coin is different and going to be good for blockchain. As a long time enthusiast of the blockchain technology(check out my recent post on the technology). It has been a decade since bitcoin was born and yet consumers hardly use it or use the hundreds of other crypto-currencies to pay things. Facebook is trying to change that with its new payment system built around its giant social network.
Facebook is set to release its own crypto coin next week Tuesday and its gaining currency. Dozens of companies including Visa,PayPal and Uber are backing the digital coin known as Libra. These financial and e-commerce companies, and other telecommunications firms would invest millions of dollars in a consortium that would govern the digital coin. The money would be used to fund the creation of the coin.The coin won't be directly controlled by Facebook, nor the individual members of the consortium. Some members of the consortium could serve as nodes on the system that verifies transactions and maintain records of them.
A consortium is a network that has nodes which are each managed by a different organization and no organization has a control over the data and the chain. However it is shared within the organization and everyone from these organizations can view and modify the current state.
Keeping the crypto-currency network separate from Facebook's platform gives the social-media company some cover. This is a big advantage at a time when it is under pressure to address privacy shortcomings. This could exert a considerable influence over the underlying technology.
Why the backing from big names?
Facebook has over 2.4 billion active users monthly, and this was obviously too strong for many companies to pass up. Participating in Libra allows these companies payment ambitions should the project gain attraction with consumers.Here is a list of companies backers and potential users
- MasterCard Inc
- PayPal
- Uber
- Visa Inc
- Spotify
Talks with some of the partners are ongoing, and the group’s eventual membership may change and the company is set release a white paper introducing the coin next week. It is also not the only social networks and messaging app that has decided to launch its own digital assets. The others include Kik, with its KIN token, or Kako from South Korea. This would help users and individuals have faster and cheaper services to send and receive money.
The anticipated move by Facebook is seen as an endorsement of nascent blockchain, the technology that underpins crypto-currencies.
The anticipated move by Facebook is seen as an endorsement of nascent blockchain, the technology that underpins crypto-currencies.