Facebook Developing Libra Cryptocurrency to 'Reinvent Money'

Credit: FacebookCredit: Facebook

The madmen actually did it. Facebook today announced that it's forming a new subsidiary focused on financial services, Calibra, and that its first application will be a mobile app through which people can manage everything involving the Facebook's cryptocurrency, Libra. The company said it's "still early in the process of developing Calibra" but expects the subsidiary's digital wallet to debut in 2020.

Facebook wasn't shy about its ambitions for Calibra and Libra in promotional materials. Calibra's website says it's "a connected wallet for a connected world," while Libra's site claims it'll "reinvent money" and "transform the global economy" so "people everywhere can live better lives." The company isn't positioning these projects as experiments; it's pitching them as the future of financial services.

That future should look familiar to cryptocurrency enthusiasts. Libra is based on the same blockchain technology as other cryptocurrencies, which is supposed to make transactions simple and secure. And for now Calibra's just building a wallet to handle those transactions. They are technically separate from Facebook proper, but that distinction will probably only be noticed by financial regulators.

Why? Partly because that's how Facebook operates. Instagram, WhatsApp and other subsidiaries are technically independent from Facebook too, but the separations between those entities can erode. Especially when Facebook makes moves like trying to merge user data from all those services to enable a unified back-end.

The lines between Facebook and Calibra will be blurred from the start. Calibra will launch its own digital wallet, sure, but it's also going to be built into Messenger and WhatsApp. People will also be encouraged to use their accounts with Facebook properties to sign up for Calibra. They aren't technically required to, but otherwise they have to supply a government-issued photo ID. Which seems more convenient?

Facebook attempted to ease concerns about how it will handle the privacy of Calibra users. The company said in its announcement:

"Aside from limited cases, Calibra will not share account information or financial data with Facebook or any third party without customer consent. This means Calibra customers’ account information and financial data will not be used to improve ad targeting on the Facebook family of products. The limited cases where this data may be shared reflect our need to keep people safe, comply with the law and provide basic functionality to the people who use Calibra. Calibra will use Facebook data to comply with the law, secure customers’ accounts, mitigate risk and prevent criminal activity."

More details about its plans for Calibra are in a "Customer Commitment" document.

Committing to protecting user privacy is one thing, and actually doing so is another thing entirely. Facebook has a history of failure, whether it's by misusing phone numbers meant for two-factor authentication, accidentally giving employees access to hundreds of millions of passwords, or "unintentionally" uploading the email address books of 1.5 million users.

Now the company's planning to "reinvent money" and, therefore, make itself more central to its users' lives in the process. Even with the best intentions, it's not hard to see how that could backfire, accidentally or not. Hopefully Facebook's efforts are stringently scrutinized by potential users and financial regulators alike.

6 comments
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  • COLGeek
    What could possibly go wrong with this (dripping with sarcasm)? :sarcastic::pfff::pouah:
  • spiketheaardvark
    Considering people are starting to turn away from Facebook in general, I'm pretty sure the unified response will just be, "nope."
  • Jake Hall
    Yeah, no