When Facebook announced that it wanted to release a cryptocurrency, the world didn’t know how to respond. Many feared that the Big Tech firm would gain too much power over its users if it was responsible for managing a form of currency. Responsibility is the key word considering Facebook’s history of legal and ethical mishaps.
As such, its Libra cryptocurrency already has a rocky past despite the fact that it hasn’t launched yet. That could soon change according to a report from the Financial Times. Facebook reportedly wants to launch a trial run for the cryptocurrency as soon as January.
At the same time, it appears that the project has been significantly scaled back from its original outline. That’s probably a good thing as it will give Facebook and regulators time to figure out how to manage Libra.
The Libra Association, the consortium behind the cryptocurrency project, released an outline of its plans back in April. At the time, its goal was to create a number of “stablecoins” based on real global currencies like the U.S. dollar, euro, and pound.
Based on the latest reports, Libra will start smaller than that. The organization plans to release one stablecoin that is tied to the U.S. dollar.
For those who aren’t familiar, stablecoins are a form of cryptocurrency that is backed by a real-world currency. They don’t fluctuate in value as much as other types, making them a safer option than something like Bitcoin. Some popular stablecoins already in existence include Tether, PAX, and USDC. By rolling out a stablecoin that’s backed by the dollar, Facebook and the Libra Association ensure that one unit of their coin will always be worth one dollar.
This is a change from the group’s original plan to create a token based on multiple real-world currencies. Although that will likely still happen at some time in the future, releasing a single stablecoin is the best move at this stage.
More to Come
While Facebook’s first cryptocurrency admittedly isn’t that exciting, there is plenty more on the way. The Libra Association’s 27 members still plan to create stablecoins based on other real-world currencies. When those will arrive is unclear.
They also plan to release a composite coin that will have a value based on a collection of currencies. That makes it a more exciting opportunity since there is some room for growth.
Still, the main purpose of Libra is for Facebook users to perform transactions on the social media platform. To make this possible, Facebook is launching a cryptocurrency wallet called Novi. It’s likely that Novi will launch at the same time as the U.S. dollar-backed stablecoin.
The app lets users send and receive tokens to other users and businesses. According to the Financial Times, Novi is “ready from a product perspective.”
Meanwhile, Libra users will also be able to manage their digital currency through both WhatsApp and Facebook Messenger. It remains unclear when Libra Association members like Shopify and Uber plan to roll out services of their own based on the coin.