Despite reports that Facebook is gearing up to reveal its new cryptocurrency as early as next week, a source with knowledge of Facebook’s operations said the project’s software has a long way to go until it can be used.
Sources attribute the delay to blockchain industry incumbents being reluctant to work on a project that doesn’t appear to have the hallmarks of a true cryptocurrency.
Facebook’s GlobalCoin project, also known as Project Libra, may face significant hurdles as the social media giant works toward a prospective launch.
One source estimated that early 2020 would be a more realistic timeframe for testing, so any imminent announcements would merely be forward-looking plans.
Based on conversations with seven knowledgeable sources, CoinDesk confirmed Facebook’s plan is to connect users’ financial information to their personal Facebook profiles. Such data would likley be under Facebook’s control, hosted in company databases. There are even talks about integrating with external payment processors like Mastercard, which the Wall Street Journal reported has signed on to help finance the GlobalCoin project. In a call with CoinDesk, Facebook declined to comment.
Sources compared GlobalCoin to Alipay, which allows digital payments across social platforms yet is also associated with Chinese government surveillance, and cited political lobbying as a cornerstone of Facebook’s broader effort.
This has created a rift between various partners from the blockchain industry, which were reluctant to work on a project that offered users little control over their digital identities. Sources say Facebook entered fruitless talks with startups Tendermint and Stellar, then even expressed an interest in acquiring MobileCoin, the startup advised by Signal creator Moxie Marlinspike.
The above-mentioned teams declined to comment. In their absence, Facebook acquired the blockchain startup Chainspace, with a keen eye on its proprietary consensus algorithm.
Blockchain consultant Maya Zehavi told CoinDesk she is concerned the GlobalCoin consortium with Visa, Mastercard, PayPal and Facebook could create a system with limited accountability yet ample power to exclude individual users from commerce. Plus, there’s reportedly a $10 million minimum charge for prospective GlobalCoin node operators.
“They are creating an anti-competitive moat”, Zehavi said, adding:
“It creates a silo of data rails without any guarantees about data sharing among the different participants, and the computation being done to access the services. Meaning some computation being done could kick you out of Uber, Facebook and Shopify, if you become a risk-management issue.”
Given this conflict between the cypherpunk ethos and Facebook’s public plans, the social media giant is allegedly using aggressive recruiting.
Facebook allegedly hired a team with several dozen cryptocurrency experts with annual compensation packages worth several million dollars each, one source said. It should be noted, however, this may be seen as a competitive rate for rare skill sets in Silicon Valley.
Meanwhile, Facebook is aggressively pursuing partnerships with global brands such as Uber, that may someday accept GlobalCoin. Since the majority of Facebook’s 2.38 billion monthly active users live outside the United States, such partnerships would be crucial for branding this cryptocurrency as a global asset rather than an American fintech initiative.
One consultant said that Facebook’s Instagram and WhatsApp acquisitions have put the company in a very different position than it was a decade ago. Plus, the public views bitcoin and other cryptocurrencies as more secure and private than traditional payment options, another source said explaining why Facebook may be marketing this revamp as a blockchain project.
Facebook declined to comment on how user data would be used or shared. It also declined to comment on how GlobalCoin accounts would be custodied.
“You’re creating a buffer zone of incumbents that can afford to participate”, Zehavi said of Facebook’s strategy. “Instead of creating a version of Stripe with data verification with privacy for developers to offer new applications and services.”