Facebook announced its own cryptocurrency Libra that will be backed and controlled by the Libra Association which also includes founding members Uber, Lyft and Spotify.
The platform will allow users to buy and send money without racking up as many fees as traditional financial platforms. Users can buy or cash out the cryptocurrency at local exchange points and spend it using interoperable third-party wallet apps, according to a Libra whitepaper.
The cryptocurrency also claims to make it easier to send money between countries for less that it would cost with traditional providers.
Facebook is also launching a subsidiary called Calibra to handle its crypto dealings and protect user privacy by keeping Libra payments and Facebook data separate so that it won't be used for targeted advertising.
User identities also won't be tied to publicly visible transactions but Libra association members will earn interest on money that users cash in. That interest will be held in reserve to keep the value of the currency stable.
ProPrivacy.com digital privacy expert Ray Walsh expressed doubts about the platform given Facebook's track record for protecting consumer data.
“Considering that Facebook is already the second largest advertiser in the world (second only to Google), this added integration is concerning,” Walsh said.
“The idea that social data and financial data could be combined is worrying, and although Facebook claims that it will keep the distinct data sets at arm's length - it is hard to believe that consumer habits will not be tracked in order to allow Facebook to better serve ads,” he said.
Walsh contended because Facebook produces the majority of its revenue through ads and has proven untrustworthy with consumer data on several occasions in the past, it seems unlikely that the company does not plan to exploit as much consumer data as legally permitted.