When Facebook officially announced its plans for a new cryptocurrency called Libra Tuesday, it also revealed that Spotify was part of a consortium of companies called the Libra Association that is backing the project. The music service hopes that digital money can help subscription services sign up new customers.
“One challenge for Spotify and its users around the world has been the lack of easily accessible payment systems – especially for those in financially underserved markets,” said Spotify chief premium business officer Alex Norström in a blog post. “In joining the Libra Association, there is an opportunity to better reach Spotify’s total addressable market, eliminate friction and enable payments in mass scale.”
The Libra Association, which effectively acts as a governing body for Facebook’s cryptocurrency, also counts financial institutions and payment providers like Visa, Mastercard, Paypal and Stripe as well as companies like Uber, Lyft and Ebay among its members.
Libra won’t launch as a digital currency until 2020. It will allow users to easily send money from one person to another, similar to services like Paypal and Venmo. Users will keep their money in a digital wallet, which will be integrated into Facebook Messenger and Whatsapp, and also be available as a standalone app for iOS and Android.
The technical underpinnings of Libra are similar to that of Bitcoin, with both digital currencies relying in blockchain technology to track and verify payments. However, unlike Bitcoin, which has seen huge price fluctuations, Libra will be backed by a reserve of real assets, which should give it a lot more stability. Libra will also offer fraud protection, and reimburse users if their digital money ever gets stolen.
In addition to the Libra Association, Facebook also announced the founding of a new subsidiary dubbed Calibra that will run the day-to-day business of maintaining Libra. Ultimately, the company aims for its digital currency to replace regular money for a wide variety of use cases.
“In time, we hope to offer additional services for people and businesses, like paying bills with the push of a button, buying a cup of coffee with the scan of a code or riding your local public transit without needing to carry cash or a metro pass,” Facebook said in a blog post Tuesday.
The new digital currency could also open up new markets to media companies. 1.7 billion adults worldwide don’t have access to credit cards or bank accounts, Spotify said in its blog post — and the company hopes that it will be able to sell music subscriptions to this untapped audience once Libra is in place.