Facebook Inc. said Tuesday it will roll out its highly anticipated digital currency next year, intended to be used to make payments over the internet as well as on its social-media platform.
The cryptocurrency called Libra coin uses blockchain, the digital-ledger technology that underpins cryptocurrencies like bitcoin BTCUSD, -1.09 percent to create its digital currency. However, unlike bitcoin, the digital asset will be pegged to hard currencies like the dollar and the euro EURUSD, -0.1070 percent to make it less prone to the wild prices swings associated with bitcoin and other cryptocurrencies.
The news sent Facebook’s stock FB, +2.36 percent surging over 2 percent in premarket trading. That added to the 8 percent gain over the past three sessions on the back of reports that Facebook would launch a cryptocurrency.
The move is widely viewed as an implicit endorsement of the blockchain technology and to a lesser extent crypto assets, which were first created back in 2009 when a person or persons known as Satoshi Nakamoto minted the first bitcoin.
The Facebook digital payment venture will be backed by more than two dozen companies, including Mastercard Inc. MA, +0.89 percent and PayPal Holdings Inc.PYPL, +0.57 percent as well as Uber Technologies Inc. UBER, +1.03 percent and Spotify Technology S.A. SPOT, -0.58 percent
The cryptocurrency will be overseen by a Geneva-based company called Libra Association, with many of the aforementioned backers serving as members of the independent organization.
Facebook is also creating a digital wallet called Calibra that allows users to safely store their Libra coins.
Facebook’s stock has been on a tear, since closing at a two-month low on June 3. Since then, the stock has soared 15 percent, gaining ground in nine of 10 sessions through Monday. It has run up 44.2 percent year to date, while the Nasdaq CompositeCOMP, +0.87 percent has advanced 18.2 percent and the Dow Jones Industrial AverageDJIA, +0.50 percent has gained 11.9 percent.