Facebook’s Libra co-creator: Social, financial data will remain separate
The co-creator of Facebook’s Libra says that once the blockchain-based digital currency is launched users’ social media information – and financial data tied to the stablecoin – will not be connected in any way.
Christian Catalini, the head economist at Calibra, the Facebook subsidiary in charge of the launch of Libra and its associated online digital wallet, said that from the beginning the plan for the cash-backed cryptocurrency was to profit from advertising and not the sale of private data.
“There will be measures in place, from encryption to access control, to ensure that [data] doesn’t get linked,” Catalini said during an interview for MIT’s Sloan School of Management. “From a Facebook perspective, I think the idea is to not use the data – to show more ads, to sell more ads. The Calibra wallet will have new features and we’ll build on those. And, that will be a new business model for the company, too.”
Blockchain will enable Libra cryptocurrency to be transferred without the need of a typical financial services clearance and settlement process, which can take days and require additional fees from central banks and other settlement organizations. Thus, Libra in theory would be faster and cheaper than traditional financial systems, Catalini said.
The underlying blockchain network will be able to handle thousands of financial transactions per second; data about those transactions will be kept separate from data about the social network, according to David Marcus, the former president of PayPal. He is now leading Facebook’s new digital wallet division, Calibra.
Blockchain will also reduce the cost of user verification, or the fact that one pre-verified entity has sent a payment to another verified entity. And the distributed ledger technology should also reduce the cost of networking.
“What that really means is that now you can design digital platforms where you don’t have to trust a single intermediary, you don’t have to trust the platform architect, Catalini said.