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BBC.com reported that Facebook is finalizing plans to launch its own cryptocurrency next year. It plans to establish a digital payment system in more than a dozen countries by the first quarter of 2020.

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The social media giant hopes to test its cryptocurrency by the end of the year, which has been internally called GlobalCoin.

It is expected that Facebook will be outlined in more detail this summer and has been discussed with Bank of England Governor, Mark Carney.

Founder Mark Zuckerberg met with Mr. Carney last month to discuss the opportunities and risks of launching cryptocurrencies.

The facebook also seeks advice from US Treasury officials on operational and regulatory issues.

The company is also negotiating with remittance companies, including Western Union, in the hope of finding a cheaper, faster way for people without a bank account to send and receive money.

How does the cryptocurrency of facebook work?

Facebook wants to create a digital currency that offers a reasonably priced and secure payment method regardless of whether the user has a bank account or not.

As a social networking site, Facebook has WhatsApp and Instagram. It hopes to break existing payment methods by breaking financial barriers, competing with banks and reducing consumer costs.

The digital currency network of Facebook is scheduled to be first reported in December last year, with the internal name Project Libra.

The project will work with banks and brokers to enable people to convert dollars and other international currencies into digital currencies.

It is expected that a small number of co-founders will set up this Swiss-based association in the coming weeks.

According to reports, Facebook also negotiated with some online merchants to accept cryptocurrency as a payment in exchange for lower transaction costs.

What is Cryptocurrency?

The cryptocurrency can be used to pay for items in the real world, such as hotel rooms, food, and even homes.

Digital tokens are stored in online wallets and can be sent anonymously between users.

The cryptocurrency uses blockchain technology. A blockchain is a ledger of information blocks (such as transactions or protocols) stored in a computer network.

This information is stored in chronological order, can be viewed by the user community, and is typically not managed by a central authority such as a bank or government.

The concept aims to ensure user security and anonymity by preventing tampering or hijacking of the network.

Any concerns?

Facebook has been criticized in recent years for handling personal data of users, and regulators may pay close attention to this release.

Earlier this month, the US Senate and Banking Committee wrote an open letter to Mr. Zuckerberg asking how the currency would work, what kind of consumer protection it would provide, and how to protect it.

Facebook also discusses the process of identity checks and how to reduce the risk of money laundering through the US Treasury.

It is believed that Facebook and its partners hope to prevent large fluctuations in the value of the cryptocurrency by linking it to a basket of existing currencies, including the US dollar, the euro, and the Japanese yen.

Will Facebook be successful this time?

This is not the first time Facebook has been involved in digital currency. Ten years ago, it created "Facebook Credits", a virtual currency that allows people to buy goods in apps on social networking sites.

However, Facebook Credits failed to be widely used and ended the project in less than two years.

The company will also have to develop numerous regulations in the countries it wants to launch. India is Facebook's rumored target and has recently suppressed digital currency.

However, the biggest test may be whether people will have enough trust to exchange legal currency for cryptocurrency through social networking giants.

Facebook is in the initial stages of working with governments, central banks, and regulators. Insiders acknowledge that it is ambitious to launch any cryptocurrency network early next year.

In response, Facebook, Western Union and the Bank of England declined to comment.

Can the cryptocurrency of Facebook be successful?

The biggest attraction of cryptocurrencies to banks and big companies is the technology that supports them.

Blockchain technology can bypass the banking network and help reduce the time and cost of cross-border remittances.

The Bank of England’s former Chief Financial Officer warned 20 years ago that if people started using digital currency, the central bank might become “insignificant” because it used pounds and pennies today.

Blockchain expert David Gerard said that the Facebook book will generate valuable spending data by creating its own payment system.

However, he questioned why social media giants need to use their own cryptocurrency to collect this data. Instead, he said, Facebook can create a platform like PayPal that allows users to transfer traditional currencies.

Cryptographic currencies are vulnerable to price volatility, and Gerrard said it could be a barrier to Facebook's so-called GlobalCoin success. He explained,

Normal people don't want to deal with currencies that have been ups and downs.

But Garrick Hillerman, a researcher at the London School of Economics, said the GlobalCoin project could be one of the most significant events in the short-term history of cryptocurrencies.

To be conservative, he estimates that about 30 million people use cryptocurrencies today. In comparison, the current monthly number of Facebook users is 2.4 billion.

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