A visual representation of digital currency. Facebook unveiled its subsidiary Calibra, a digital wallet to store and send Libra, a new cryptocurrency to launch in 2020. Photo: Chesnot/Getty

Facebook officially launched its much-hyped new cryptocurrency project on Tuesday.

Libra, a new cryptocurrency run by an independent non-profit, will launch in 2020. Facebook also announced a new subsidiary, Calibra, that will build products for Libra. It will initially build payments into WhatsApp and Instagram, before a stand-alone app.

The launch confirmed details of the project but didn’t answer a fundamental question: why launch a cryptocurrency?

“Nobody still has any idea why the FacebookCoin is a crypto,” David Gerard, the author of ‘Attack of the 50-foot blockchain’, said in a newsletter earlier this week. “Journalists at the press conference apparently asked directly why FacebookCoin is a crypto, and couldn't get a sensible answer.”

It’s not fully decentralised

The main advantages of cryptocurrencies are decentralisation and lack of censorship. Bitcoin, for example, is run by an ever evolving online network that is difficult to disrupt or take down. It is not run by any one organisation, meaning it’s unlikely to be co-opted by political wills, and if one organisation departs, others pick up the slack.

The Libra Association, the Swiss non-profit that will run the currency, is comprised of 28 founding members and looking for more. It is open sourcing its code and has released a white paper for consultation. The announcement stresses that the association is “independent” of Facebook and the company would likely argue that it’s decentralised.

But critics say it is not. Poramin Insom, the founder of privacy-focused cryptocurrency Zcoin, said the project is “still a centralised platform and is still subject to censorship, monitoring and control.”

The Libra Association is backed by top corporates, including Visa, MasterCard, Stripe, PayPal, and Uber. Each of them have committed to a minimum future investment of $10m (£8m) to access the network and help to validate transactions on it.

“Adding a consortium of global companies as validators does nothing to decentralise the system,” George McDonaugh, the CEO of London-listed blockchain investment company KR1, said in a statement.

“All the validators are known and as such can be fully 'leaned on' to adhere to the pressures that exist from the global financial systems.”

There are already non-crypto rivals

View photos Tech companies such as India's PayTM already provide mobile-based financial services. Photo: Punit Paranjpe/AFP/Getty Images More

Another advantage to cryptocurrencies is scale. Facebook cited the fact that blockchains can be “globally accessible” as one of the advantages of the technology.

Facebook is pitching Libra as a solution for the world’s global “unbanked” — the estimated 1.7 billion around the world who don’t have access to a bank account. Calibra products will let them “send Libra to almost anyone with a smartphone, as easily and instantly as you might send a text message and at low to no cost.” Those who can’t access a bank account will be able to save, pay bills, and more.

But companies already do this without blockchain.

In China and India, services like WeChat and PayTM provide mobile wallets that let people pay and save on their phones.

In Africa, services like MPesa in Kenya and Tigo Pesa in Tanzania allow people to pay bills and access financing and insurance through even dumb smartphones.

And fintech companies such as TransferWise, Remitly, and WorldRemit have all made mobile cross-border payments much easier and cheaper in recent years.

Why does Facebook need blockchain?

Messenger payments already exists

View photos Facebook Messenger. Photo: Chesnot/Getty Images More