Reports that Facebook Inc. is about to roll out a cryptocurrency as soon as next week have helped bitcoin to notch its best weekly trading period in about three weeks.
Bitcoin futures for June delivery BTCM19, +0.41% trading on the CME Group Inc. CME, +0.18% on Friday settled at $8,440, up nearly 2% on the day and up about 5.3% for week, according to FactSet data, representing the best weekly gain since the period ended May 24. Meanwhile, bitcoin prices BTCUSD, +6.65% were at $8,604, according to CoinDesk, tracking near the digital currency’s highest levels since March.
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Helping to fuel gains in an already buoyant asset are developing details on Facebook‘s FB, +2.18% reported plan for a cryptocurrency, which will be pegged to a basket of fiat currencies, like the dollar, and be used as a crypto-based payment system, tapping into the social-media platform’s 2.4 billion monthly active-user base, the Wall Street Journal reported.
The report said that Facebook will unveil the new crypto-payment platform sometime next week, with an array of heavyweight backers, which include Mastercard Inc. MA, -0.42% PayPal Holdings Inc. PYPL, +0.39% UberTechnologies UBER, -2.44% and Visa Inc. V, +0.18%
A report from news site The Block on Friday said the list of backers and potential users also includes popular crypto-trading platform Coinbase, Spotify Technology SPOT, -0.18% and venture-capital firms Andreessen Horowitz and Union Square Ventures.
Unlike traditional cryptocurrencies like bitcoin, Facebook’s crypto will be a centralized, rather than decentralized blockchain network. That means verification is controlled by a select group rather than the public, and the crypto is pegged to a hard asset as a way to mitigate the volatile price swings that have been associated with digital assets, like bitcoin and Ethereum’s ether tokens ETHUSD, +3.44%
The Journal said that cryptocurrency, likely to be called Libra, won’t be controlled by Facebook but members of some of the early supporters could serve as digital verifiers of transactions and record-keepers, otherwise known as nodes in the parlance of cryptos.
The anticipated move by Facebook is seen as an endorsement of nascent blockchain, the technology that underpins cryptocurrencies, created about a decade ago with the formation of bitcoin by an individual or group using the name Satoshi Nakamoto.
The payments effort would also come as Wall Street firms and businesses are increasingly experimenting with digital assets. JPMorgan Chase & Co. JPM, +0.26% earlier this year announced a token, called JPM Coin, intended to handle international settlements.
Shares of Facebook on Friday climbed 2.2% and 4.6% for the week, compared with a weekly gain of 0.4% for the Dow Jones Industrial Average DJIA, -0.07% a 0.5% return for the S&P 500 index SPX, -0.16% and a 0.7% rise for the tech-heavy Nasdaq Composite Index COMP, -0.52% over the five-session period.