An association of major payments and technology companies will launch a blockchain-based digital currency called Libra some time in the first half of next year, according to an official announcement on Tuesday. The new initiative, some details about which have leaked in recent days, has the backing of Facebook Inc. and a consortium consisting of 27 other companies, including Mastercard Inc., PayPal Holdings Inc., PayU, Stripe Inc., and Visa Inc.
The Libra Association plans to expand that membership to some 100 companies by the time the new coin launches, according to a white paper the association posted Tuesday.
According to the white paper, “mass-market usage of existing blockchains and cryptocurrencies has been hindered by their volatility and lack of scalability, which have, so far, made them poor stores of value and mediums of exchange.” The Libra initiative will solve those problems by tethering the coin to a basket of fiat currencies and operating on a decentralized blockchain, according to the white paper. Each association member is eligible to operate a node on the new network.
The coin will also feature so-called intrinsic value, with backing by bank deposits and short-term government securities. Also, a “competitive network” of exchanges will buy and sell the coin, the white paper says. To govern the network, the founding members will form the Libra Association, based in Geneva, Switzerland. The association in turn will be governed by the Libra Council, consisting of one member for each validator node on the network.
“PayPal believes in democratizing participation in the digital economy for people from all walks of life and businesses of all sizes,” the payments company said in a statement. “PayPal is pleased to join other leading technology and financial services organizations to form Libra, with the goal of exploring a new, global digital currency, built on blockchain technology.” Mastercard, Stripe, and Visa did not immediately respond to a request for comment.
Facebook, which has lent most of the impetus behind the Libra venture, “is expected to maintain a leadership role through 2019,” the paper says. The huge social-network company has come under fire in recent months for alleged privacy violations, and perhaps for that reason is expected to build firewalls between it and the information Libra will manage.
“Facebook created Calibra, a regulated subsidiary, to ensure separation between social and financial data and to build and operate services on its behalf on top of the Libra network,” the white paper says. “As one member among many, Facebook’s role in governance of the association will be equal to that of its peers.”
Pending the start of operations, the association says it is releasing the code for the Libra blockchain and launching a so-called testnet on which developers can build experimental features.