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, -1.65% to create its digital currency. However, unlike bitcoin, the digital asset will be pegged to hard currencies like the dollar and the euro EURUSD, -0.2674% to make it less prone to the wild prices swings associated with bitcoin and other cryptocurrencies.
The news sent Facebook’s stock FB, +4.24% surging over 2% in premarket trading. That added to the 8% gain over the past three sessions on the back of reports that Facebook would launch a cryptocurrency.
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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, -0.35% and PayPal Holdings Inc. PYPL, +0.85% as well as Uber Technologies Inc. UBER, +1.27% and Spotify Technology S.A. SPOT, +3.40% 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%, gaining ground in nine of 10 sessions through Monday. It has run up 44.2% year to date, while the Nasdaq Composite COMP, +0.62% has advanced 18.2% and the Dow Jones Industrial Average DJIA, +0.09% has gained 11.9%.