Published: Sun, June 16, 2019
Markets | By Erika Turner

The giant companies paying $10m for Facebook crypto nodes

The giant companies paying $10m for Facebook crypto nodes

For the a year ago or so, a team of dozens of Facebook employees have been working on applications for blockchain, the buzzy technology that underpins digital currency bitcoin and other cryptocurrencies, to figure out how Facebook could utilize it.

The Wall Street Journal reported on Friday that the social media giant had recruited "more than a dozen" companies to fund its upcoming cryptocurrency, reportedly called Libra.

The publication writes that each firm will invest around $10 million into a consortium that will govern the effort.

GlobalCoin is now expected to be unveiled on June 18.

Facebook counts more than 2 billion users worldwide, many of whom come from developing countries and are unbanked. Further, Libra will be classified as a stablecoin - a kind of cryptocurrency that is part of a list of other government-issued currencies, much like a fiat.

According to Facebook's head of financial services & payment partnerships for Northern Europe Laura McCraken, the Libra won't be pegged to the value of the US dollar, but that of various currencies to prevent price fluctuations.

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While the Libra Blockchain is set to be announced soon, Facebook is only going to launch the cryptocurrency itself by 2020. Facebook is betting it can change that with a crypto-based payments system built around its giant social network and its billions of users.

The cryptocurrency, under Facebook's "Project Libra", is reportedly aimed at allowing Facebook's global users to transfer money across borders and to make online purchases.

Facebook has attempted to launch two digital tokens in the past without success.

The borderless, transaction fee currency is expected to be used across Facebook, Messenger, WhatsApp, and Instagram.

In the post, Facebook criticizes existing blockchains, which it claims have yet to reach mainstream adoption, making them poor solutions as a store of value and medium of exchange.

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