Facebook plans to raise up to $ 1 billion in investments for a new payment network based on encrypted digital currency, which could be a direct competitor to conventional credit cards, according to the Wall Street Journal.
The project, which the company has been working on for more than a year, carries the name Project Libra. The social networking giant plans to introduce the digital currency so that its more than 1.5 billion users can trade with each other and spend on the social network and other sites.
Earlier reports had spoken of the company's intention to develop a coded digital currency for its own messaging application, Watsab, but the new information shows that Facebook is developing an encrypted digital currency for its social network.
It is not clear exactly how the new payment network will work, but the newspaper said that Facebook is trying to raise about $ 1 billion from traditional financial institutions to support the value of the currency, and protect it from the huge price fluctuations that have emerged with the currency of Petco.
The company thinks in a stable currency linked to the dollar or other traditional currencies, while the VASAP encrypted digital currency is supposed to be linked to a basket of currencies.
Facebook is looking to make its payment network a direct rival to Visa and MasterCard. BlockChain's use of the block should help traders recover 2 to 3 percent of the fees they have to pay to accept traditional credit card payments.
"Like many other companies, the company is exploring ways to take advantage of the power of Qin Block technology," a Facebook spokesman said.
One of the great strategic advantages of Facebook is the fact that a good number of websites use their APIs to allow users to sign in to those sites using their social network data.
It may be easy to extend this existing infrastructure to allow users to make purchases on third-party websites using their Facebook data.
Facebook faces the dilemma that the main advantage of the Qin Block networks is that it is fully open and decentralized. Open software platforms tend to encourage innovation, but that openness makes them a magnet for fraud, piracy, money laundering, and other problematic behaviors.
Facebook should try to address these problems by tightly integrating the network with its social networking platform, and may need to compensate users for losses, if they occur, and employ people to monitor the network to prevent money laundering.