Libra, the new Facebook cryptocurrency has finally be revealed with plans on the way for its full deployment in the first quarter of 2020. The idea for the new cryptocurrency was to connect the 1.2 billion Facebook users without access to traditional banking platforms. While its main goal is to create the first truly mainstream cryptocurrency available not only to Facebook 2.4 billion monthly users. But also extending to the Libra association members platforms.
What is Cryptocurrency?
A cryptocurrency is a digital or virtual currency which uses cryptography for its security. This makes the currency very difficult to counterfeit. Moreover, cryptocurrency is built on blockchain technology with decentralized systems, which also aid security. But a major feature of cryptocurrency is its organic nature. The currency is not issued by any central authority, making it immune to government interference or manipulation.
Features of a cryptocurrency
Cryptocurrency is distinct from the regular currency with the following features;
- Cryptocurrencies simplified transfers through the use of public and private keys for security and privacy purposes.
- It makes transactions easily conducted with minimal processing fees.
- Cryptocurrency is difficult to counterfeit because of its cryptographic protocols.
- It has a decentralized system, making it not subject to a central authority such as governments’ regulations.
What is Libra Cryptocurrency?
Libra, as named after the Roman unit of measurement for coins, is a much different cryptocurrency from the others. Libra will allow you to buy or cash out its currency easily. This you can do online or at local exchange points like grocery stores or malls. Libra will also allow you to spend its currency easily using interoperable Facebook-owned wallet (Calibra) or a third-party wallet app. The Libra cryptocurrency will be available on Google Play and the Apple Store as a standalone app.
The Libra currency
Libra would be the world’s first stable cryptocurrency upon launch and also a good medium of exchange. It’ll have its value tied to a basket of bank deposits and short-term government securities. While also linked to stable international currencies such as the Dollar, Euro, Yen, Pound, Franc, etc. The unit of the Libra cryptocurrency is a Libra, which is represented by three wavy horizontal lines shown above.
Facebook and Libra
Facebook will have Libra integrated into its services such as WhatsApp, Messenger, and Facebook itself. To achieve this, Facebook is launching a subsidiary company called Calibra. Calibra will deal with the handling of Libra and protects users’ privacy. This is because Facebook does not want to integrate your Libra payments with your Facebook data. Ensuring your Facebook identity is not tied to your publicly visible transactions to avert ad targeting. Facebook is hoping to make Libra the evolution of PayPal. By becoming more efficient with fewer fees while easily accessible to the unbanked. However, a major goal of Libra is its setup simplicity as well as its ubiquitous payment method.
But in spite, Facebook won’t just be fully in control of Libra. Instead, it gets just a single vote in its governance like every other founding members.
The Libra association members
The Libra association members, twenty-eight (28) in number, will all have a vote each. This is given for their investments of at least, $10 million into the project’s operations and meeting up with other conditions. The association membership comprises of:
- Payments: PayPal, Mastercard, PayU (Naspers’ Fintech arm), Visa, Stripe.
- Technology and marketplaces: Facebook/Calibra, eBay, Booking Holdings, Farfetch, Spotify AB, Mercado Pago, Uber Technologies, Inc, Lyft.
- Telecommunications: Vodafone, Iliad.
- Blockchain: Coinbase, Anchorage, Inc., Xapo Holdings Limited, Bison Trails.
- Venture Capital: Union Square Ventures, Andreessen Horowitz, Ribbit Capital, Breakthrough Initiatives, Thrive Capital.
- Academic institutions, Nonprofit and multilateral organizations: Kiva, Creative Destruction Lab, Women’s World Banking, Mercy Corps.
Notwithstanding, Libra partnership is open to anyone that meets its requirements. Also, Facebook is still hoping for founding partners to reach a 100 before the official Libra launch.
Moreover, Facebook/Calibra and other founder members of Libra will earn interest on the money users cash in. The cash in money is held in reserve to keep the value of Libra cryptocurrency stable.
How do I use Libra cryptocurrency?
The cryptocurrency would be used through Libra wallet apps such as Facebook Calibra wallet. However, Facebook Libra is just one of the several wallets apps which would be managed and maintained by Calibra. While other Libra partners would have and manage their own wallets. Although, for now, you won’t be able to make or receive any real payments until when Libra is officially launched next year. Still, you can sign up now for Facebook Calibra and have early access once it’s ready for use.
What are the disadvantages of using Libra?
With all the glamour Libra is posing and promising, it’s also fair to look at its other side:
- Libra, a digital money in the same category with a credit-card would cause people to spend more money that they would have otherwise spent with cash.
- Social media promotes spending, no thanks to its ads promotion and peer pressure. By having an integrated currency tool as Libra integrated into social media, will cause easy spending.
- It will take consumers time to adjust and understand how Libra’s currency exchange works. Which would be needed to know the worth of their physical money when it’s converted to Libra or when it’s cashed out.
- It pushes the idea of a cashless society which disenfranchises the poor, elderly and unbanked.
- Spending your Libra currency would demand you using an Internet-enabled gadget resulting in cost and fees.
- A cashless society can result in an entire economy vulnerable to disruptions and attack.
Finally, the Libra cryptocurrency is coming with full force. Having the strength and backing of its member partners who’re big players in their various sector. Although, Libra still lack the support of Google, Twitter or any big financial institution such as a bank. But in all, Libra is a great idea and we hope it does live up to Zuckerberg’s lofty economic goals and empower billions of people worldwide.
For questions or suggestions, we are a click away.
Please leave a comment below.