What will Facebook's crypto-currency be like?

Today Programme

BBC Radio 4

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Social network Facebook is apparently expected to announce details of its own crypto-currency later today.

According to Dr Garrick Hileman, head of research into blockchain at London School of Economics, launching a digital currency is Facebook's way of challenging the banks and enabling a new way to pay on its platform.

"Years ago Facebook introduced a credit system, this was for transacting on the Facebook platform - for in-currency in games and other apps on Facebook," he told Today.

"It ran into trouble in part because micro-transactions - very high frequency low value transactions in pennies - are not very easy to make viable when you factor in the cost of ~Visa or Mastercard fees."

A way around this would be to just have its own crypto-currency and make it a stable coin pegged to a currency like the US dollar.

"We've seen in China, Wechat Pay, Alipay dominate digital payments. Most people in China now use non-bank digital payments so banks are very nervous, so unsurprisingly we've seen Visa Mastercard Paypal join this initiative," he added.

Facebook 'hires bank lobbist'

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The Financial Times is reporting that Facebook has hired a senior British bank lobbyist as it braces for greater political and regulatory scrutiny in Europe over its plans to launch its own digital currency and other financial services.

It says that Ed Bowles, Standard Chartered’s European head of corporate and public affairs, will join Facebook in September as its London-based director of public policy.

Standard Chartered, Facebook and Mr Bowles declined to comment.

Last month the BBC reported plans by Facebook to launch its own crypto-currency.

Watch out for new wave of scams

Today Programme

BBC Radio 4

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The Financial Conduct Authority is warning about the prevalence of scams in the crypto asset world. Lots of fraudsters are at work and the FCA says the average loss if £14,600.

The fraudsters often contact people on social media, encourage them to invest and initially show them statements showing the value of the investment has gone up. The victim will then be encouraged to deposit more money and sell the scheme to friends and family.

"Never invest based on someone contacting you out of the blue, through social media, or calling you up," said Laura Suter, Personal Finance Analyst, at AJ Bell.

"Don't respond to anything that is time bound. Quite often people will say this is a great investment opportunity but you've got to put your money in the next half an hour. Don't necessarily trust family and friends that they've done their research," she said.

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In this episode of File on 4 the stranger than fiction story that's the latest cryptocurrency scandal to leave tens of thousands of people out of pocket. The news about QuadrigaCX broke almost to the day that crypto-currencies celebrated a decade in existence.  On this anniversary, we investigate the current state of the market and uncover how these sometimes tragic events have unfolded both here in the UK and across the world. With the UK government and other countries now considering attempting to regulate the market, we ask if these scandals could have been prevented and could now be avoided in the future. 

Reporter: Paul Connolly 
Producer: Kate West 
Editor: Gail Champion

Photo credit: Reuters.

Regulatory warning

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The Financial Conduct Authority has issued a warning about crypto-currency business Next Coin Market.

The City regulator says this "is an illegal organisation based in Bulgaria, claiming to be an FCA authorised firm offering crypto-currencies to UK consumers".

"We have become aware they are sending consumers a link to a fake website, which gives the impression they are authorised by the FCA, when they are not. This is criminal activity."

The regulator is urging consumers to get in touch if they have been contacted by the firm.