Facebook, the social media and mass surveillance giant, is developing a centralized faux cryptocurrency that more resembles paypal than bitcoin. Facebook is calling the new digital currency “GlobalCoin.”
The secretive initiative to create a digital currency has been code-named “Project Libra” and is planned to be rolled out in several countries by the first quarter of 2020, with testing beginning at the end of this year.
A “centralized digital currency” like GlobalCoin is very different from a cryptocurrency with a decentralized leger, also known as a blockchain. Bitcoin, for example, is a cryptocurrency that functions on a blockchain system.
When determining whether something is a cryptocurrency, it’s important to look at the characteristics of decentralized cryptocurrencies, like bitcoin, that set them apart from corporate or government controlled centralized digital currencies.
With Bitcoin, the innovation was the use of proof-of-work to allow the people responsible for maintaining and determining the leger to be dynamic and potentially anonymous. This allows for a level of censorship resistance and security that is unique to cryptocurrencies.
In order for Facebook try to stabilize the new digital currency, the company is looking to peg its value to a basket of currencies, including the US dollar, the euro and the Japanese yen.
Mark Zuckerberg met with the governor of the Bank of England, Mark Carney, to discuss the plans, according to the BBC. Facebook has reportedly had meetings with trading firms, cryptocurrency exchanges, and bank officials around the world to prepare the security infrastructure for the digital currency, and the ability to exchange them for other currencies and make payments with the corporate money.
This is the company’s second venture into a digital payment system. Around 10 years ago, the company rolled out the digital currency Facebook Credits and it was shut down after only two years.