An executive behind Facebook’s venture into cryptocurrency told CNBC on Tuesday that consumers shouldn’t be worried about the social media network gaining access to their financial data.
“To earn people’s trust, we are going to have to make strong commitments on privacy,” said David Marcus, the head of Facebook‘s Calibra division, a newly announced subsidiary to host a digital wallet by the same name for storing and exchanging the digital coin called Libra.
“If people don’t want to trust us, they can use any of the other wallets that will be available,” Marcus said in a “Squawk Box ” interview. “There will be plenty of competition.”
At a time when it is trying to rebuild user trust after data privacy and security scandals, Facebook announced Tuesday an ambitious endeavor to create Libra and launch it in the first half of 2020.
The goal — using blockchain, the technology underlying bitcoin on other cryptocurrencies — is to make it as easy to send money across the world as it is to send a photo. But unlike bitcoin and others, Libra will be backed by more stable government-backed money.
The Libra currency will not be run by Facebook, but rather by a nonprofit association supported by a range of companies and organizations.
“We painstakingly removed ourselves from governing this network,” said Marcus, the former PayPal president whom Facebook hired in 2014 to lead its Messenger app.
The Calibra digital wallet will be the way Facebook eventually makes money through financial services such as loans. However, Marcus said those add-ons won’t happen anytime soon.
Marcus said the latest venture is “very close” to Facebook’s mission of connecting people across the world. People in the U.S. are privileged when it comes to having a stable currency and trusted institutions, he said. “But that’s not the case for many people across the world.”
He said the new currency would lower the barrier for cross-border payments.
“We felt it was time to try something new, and this is the beginning of a long journey in launching this new network,” Marcus said. Other cryptocurrencies are “investment vehicles or investment assets rather than being a great medium of exchange. [Libra] is really designed from the ground up to be a great medium of exchange, a very high quality form of digital money that you can use for everyday payments.”
Shares of Facebook opened Tuesday’s trading up 2.3%, after soaring more than 4% to $189 per share on Monday ahead of the announcement. The stock has gained 44% this year.
Libra is backed by other payment companies, including Visa and PayPal and tech giants eBay, Lyft, Spotify and Uber. The 27 companies in total each will be expected to invest a minimum of $10 million to fund the project, according to The New York Times.
Reports speculating about the Facebook news over the past few weeks helped boost the price of bitcoin. The world’s biggest digital coin jumped across the $9,000 level on Sunday, on the thought that Facebook’s entry in crypto would add legitimacy to the industry. Bitcoin gained ground Monday as well, but slipped some in Tuesday trading.