Published: Sun, June 16, 2019
Markets | By Otis Pena

Facebook secures Visa, Mastercard, PayPal backing for Libra cryptocurrency

Facebook secures Visa, Mastercard, PayPal backing for Libra cryptocurrency

In brief: With Facebook about to launch its new cryptocurrency, the social network has secured more than a dozen big-name backers to support its venture, according to a new report.

After months of rumours, it appears a Facebook cryptocurrency is imminent.

Facebook has received backing from Visa, Mastercard, PayPal, Uber, Stripe, and other companies for its upcoming Libra cryptocurrency, which will be announced next week.

As The Block first reported earlier today, the firms involved in the project, as members of its governing consortium, include companies spanning technology, digital assets, and retail. Unlike the regular cryptocurrencies, the company's crypto coin will be a stablecoin- a cryptocurrency pegged to real assets like cash or precious materials which will cushion it from fluctuation in prices.

Third-party organizations, contributing as much as US$10 million each, will obtain the privilege to act as "nodes" on the payment network for Facebook's cryptocurrency, with the computing power necessary to validate transactions by resolving complicated mathematical equations.

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The stablecoin - variously known as Libra or Global Coin - is due to be unveiled next week and will launch next year.

Facebook, Mastercard, Paypal, Visa and Uber did not immediately respond to requests for comment.

Furthermore, the report holds that all the money will be used to fund the entire process of creating the new cryptocurrency, which will, in turn, be attached to a basket of government-issued currencies. It'll be usable for low or no-fee payments between its users through its platforms, including WhatsApp and Facebook Messenger.

Given Facebook's infamous security management, the blockchain would supposedly be "far more centralised" than Bitcoins and the company would tap outside firms to help run the system. "It is a good idea though because Facebook is now going to start competing with Amazon in e-commerce".

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