"Libra" is being designed by a consortium of companies including Visa, Mastercard, PayPal and Uber. Facebook will launch a "wallet" app for buying and selling Libra, called Calibra, and will let people use it for payments over WhatsApp, the global messaging service, and Facebook Messenger.
So – should you buy Libra when it finally launches?
Cryptocurrencies were initially designed as an alternative to conventional money, outside of the control of central banks and governments. Cryptocurrencies operate on a "blockchain", a record of transactions designed to be resistant to hackers.
There are question marks over whether Bitcoin and others have ever truly acted as a practical currency. Once prices began to rise, speculators viewed the dozens of digital currencies available as investments and drove the price up.
Telegraph Money has previously reported on investors who have made tens of thousands of pounds buying and selling Bitcoin, etherium and other coins, although others have suffered heavy losses.
Unlike Bitcoin, Libra will be backed by central bank assets – such as pounds, dollars, and yen. Like other so-called "stable coins", this should ensure its value does not change dramatically. In theory this will guard against sudden falls in the coin's value – but will also stymie the huge price increases that crypto investors have been attracted to in the past.
The reserve of currencies will be invested in low-risk assets such as government bonds, interest from which will help fund the Libra Association, the Swiss-based organisation that will operate the cryptocurrency.
The Association hopes Libra will become used around the world to make payments over the internet, promising it will be faster, cheaper and more secure to send it than traditional forms of payment.
The Libra scheme represents a boost for cryptocurrency industry, but the sector has been hampered by wild price swings in recent years.
Bitcoin, the best-known cryptocurrency, has shot up by almost 150pc in value since the beginning of the year. One Bitcoin now equates to roughly £7,306, up from around £5,000 the same time last year.
However, despite the huge increase, it is far from its historic peak of two years’ ago.
A flood of interest in Bitcoin led to the value of the crypto market soaring from around $18bn (£13.5bn) at the beginning of 2017, to more than $800bn at its height a year later, only to plummet to its current level of around $160bn, according to data provider CoinMarketCap.
Many of the major digital currencies suffered that year, with popular alternative Cardano falling by 97pc from its 2017 high to the end of 2018. Another, Ethereum, lost 87pc of its value over the same time.
The cryptocurrency market as a whole had 86pc of its value wiped off from its peak to the end of 2018.
MP Nicky Morgan, chair of the Treasury Committee, described the cryptocurrency market as an unregulated “wild west” that leaves investors exposed to the risks of price volatility and cyber crime.
Crypto and currency trading scams more than tripled in the last financial year as duped investors lost more than £27m, according to City of London police.
A recent committee report on the sector made a “unanimously-agreed” call for the market to be regulated.
Research by Warwick Business School found that the price of cryptocurrencies was driven purely by market speculation and had no connection with any economic factors.
However, Facebook, which has already weathered its own regulatory storms, is thought to have won the backing of key governmental institutions such as the US Treasury and the Bank of England.
The design of Libra’s blockchain means that each of its 28 members will have equal control over the technology.
While anyone can join the Bitcoin network, only the members of the Libra association will initially be responsible for operating the currency.
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