Facebook Announces Own Digital Currency – Libra
Today, facebook announced a digital currency called Libra which will let you buy things or send money to people with nearly zero fees. Facebook has finally revealed plans to launch its new digital currency next year i.e in 2020 and allow the platform’s billions of users across the globe to make financial transactions online.
What is Libra ?
Libra is a simple global currency and financial infrastructure that empowers billions of people. Libra is made up of three parts that will work together to create a more inclusive financial system:
- It is built on a secure, scalable, and reliable blockchain;
- It is backed by a reserve of assets designed to give it intrinsic value;
- It is governed by the independent Libra Association tasked with evolving the ecosystem.
How Does Libra Work?
By now you know the basics of Libra. Cash in a local currency, get Libra, spend them like dollars without big transaction fees or your real name attached, cash them out whenever you want. Feel free to stop reading and share this article if that’s all you care about.
But the underlying technology, the association that governs it, the wallets you’ll use, and the way payments work all have a huge amount of fascinating detail to them. Facebook has released over 100 pages of documentation on Libra and Calibra, and we’ve pulled out the most important facts.
The Libra Blockchain
The Libra currency is built on the “Libra Blockchain.” Because it is intended to address a global audience, the software that implements the Libra Blockchain is open source — designed so that anyone can build on it, and billions of people can depend on it for their financial needs.
Every Libra payment is permanently written into the Libra blockchain — a cryptographically authenticated database that acts as a public online ledger designed to handle 1000 transactions per second. That would be much faster than Bitcoin’s 7 transactions per second or Bitcoin’s 15.
The blockchain is operated and constantly verified by founding members of the Libra Association who each invested $10 million or more for a say in the cryptocurrency’s governance and the ability operate a validator node.
The Libra Association
The Libra Association is an independent, not-for-profit membership organization headquartered in Geneva, Switzerland. The association’s purpose is to coordinate and provide a framework for governance for the network and reserve and lead social impact grant-making in support of financial inclusion.
Members of the Libra Association will consist of geographically distributed and diverse businesses, nonprofit and multilateral organizations, and academic institutions. The initial group of organizations that will work together on finalizing the association’s charter and become “Founding Members” upon its completion are, by industry:
- Payments: Mastercard, PayPal, PayU (Naspers’ fintech arm), Stripe, Visa
- Technology and marketplaces: Booking Holdings, eBay, Facebook/Calibra, Farfetch, Lyft, MercadoPago, Spotify AB, Uber Technologies, Inc.
- Telecommunications: Iliad, Vodafone Group
- Blockchain: Anchorage, Bison Trails, Coinbase, Inc., Xapo Holdings Limited
- Venture Capital: Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital, Union Square Ventures
- Nonprofit and multilateral organizations, and academic institutions: Creative Destruction Lab, Kiva, Mercy Corps, Women’s World Banking
How will I get Libra ?
Facebook isn’t going into details about how the currency will be available at launch, but signs point to a hybrid approach. The presence of traditional payments firms, such as Visa and MasterCard, in the list of founders suggests that the company will be perfectly happy to let users simply buy the currency.
But Facebook is also likely to carry out what’s known in cryptocurrency circles as an “air drop”, handing out small amounts of currency for free in an effort to kickstart the ecosystem. That will be crucial if it is to fulfil its goal of bringing financial services to people without bank accounts.
Ultimately, of course, those users will need a more reliable source of Libra income than simple handouts from Facebook. In the long-term, then, we can also expect some of Libra’s founder members to offer their employees all or part of their pay in the currency.
How can I use it ?
When the cryptocurrency launches, users can download Calibra, a digital wallet, that will allow them to send it to anyone with a smartphone. It will be available in Messenger, WhatsApp, and as a standalone app.
It is not clear which countries the coin will launch in first, though Facebook said “almost anybody” in the world with a smartphone will be able to download the app.
What can you buy with it ?
Facebook will launch Calibra, the Libra digital wallet, to allow users to send money to and from each other.
Apart from transactions on the app itself, Facebook wants to facilitate the use of Libra at various vendors for day-to-day transactions.
Ride-hailing firms Uber and Lyft are early investors in the project, suggesting that perhaps users will be able to pay for services on the apps using Libra, though neither company responded to a request for comment.
Is this safe?
There are a number of privacy concerns regarding a financial app run by Facebook. The company said it will implement technologies to prevent money laundering and fraud.
We will be using all the same verification and anti-fraud processes that banks and credit cards use, and we’ll have automated systems that will proactively monitor activity to protect and prevent fraudulent behaviour, Facebook said.
It also claims it will have “live support” to help users who lose access to accounts and, if a user loses money through fraud, Facebook has offered refunds.
Facebook claims that it take steps to protect your privacy. Aside from limited cases, Calibra will not share account information or financial data with Facebook or any third party without customer consent. This means Calibra customers’ account information and financial data will not be used to improve ad targeting on the Facebook family of products.
Facebook’s Libra Blockchain will be built on open source code that allows the developer and research community to monitor it for design and security flaws, and the company will implement a “bug bounty” program to incentivise security experts to point out vulnerabilities in the platform.
Source- TechCrunch, Libra, Facebook
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