Tech giant Facebook today said it would launch its own digital coin next year, in a potentially revolutionary step allowing 2.4 billion users to make payments over the network.
The company will allow users to change dollars, pounds and other international currencies into the cryptocurrency, called Libra.
Facebook says the coins can then be used to buy things on the internet and in shops, or to transfer money without needing a bank account.
It is understood that coins will be pegged to currencies such as the dollar to minimise price swings, although the firm refused to confirm this.
The long-awaited cryptocurrency is being developed in Switzerland, backed by payment heavyweights such as Mastercard, Visa, and PayPal. Others involved in the project include ride-sharing firm Uber, music giant Spotify, online auction website eBay and telecoms giant Vodafone.
In total 28 firms have signed up and the social network hopes to have 100 on board by the time of the launch.
But the project faces stiff obstacles as it requires regulatory approval from central banks. In April founder Mark Zuckerberg met Bank of England Governor Mark Carney to discuss the launch. The Bank said today it had not officially given the project the green light.
According to David Marcus, heading the project at Facebook, the project has been given “general cautious support” by the world’s “most-trusted central banks”. He said: “Libra holds the potential to provide billions of people around the world with access to a more inclusive, more open financial ecosystem.”
But others were highly sceptical, adding that it would be a surprise if the project makes its launch date for the first half of next year.
One tech private equity insider said: “I think Facebook needs to be very careful in this space. It’s not the same as taxis or selling books. If it goes wrong people could be left with nothing. They could be destitute.
“Finance is different to any other industry and quite rightly the regulation is tighter.”
Last week Facebook beefed up its lobbying team by hiring Ed Bowles, head of corporate and public affairs at financial services firm Standard Chartered, who joins its team in September.