- Facebook has finally revealed the details of its cryptocurrency, Libra, which will let you buy things or send money to people with nearly zero fees. You’ll pseudonymously buy or cash out your Libra online or at local exchange points like grocery stores, and spend it using interoperable third-party wallet apps or Facebook’s own Calibra wallet that will be built into WhatsApp, Messenger and its own app. Today Facebook released its white paper explaining Libra and its testnet for working out the kinks of its blockchain system before a public launch in the first half of 2020.
What is Libra?
Facebook says Libra is a “global currency and financial infrastructure”. In other words, it is a digital asset built by Facebook and powered by a new Facebook-created version of blockchain, the encrypted technology used by bitcoin and other cryptocurrencies.
Why is it called Libra?
The name Libra comes from the basic Roman measurement of weight. The abbreviation lb for pound is derived from Libra, and the £ symbol originally comes from an ornate L in Libra.
Why is Facebook launching a cryptocurrency, and are they allowed?
Facebook claims it wants to reach the 1.7 billion people around the world who do not have access to a bank account.
The company is likely to run into regulatory hurdles and antitrust concerns, especially at a time when many regulators want to break up Facebook, but no specific legislation has been put forth ahead of the launch. Amidst rumours of Facebook’s new financial expansion, members of the US Senate wrote to CEO Mark Zuckerberg in May asking for clarification on privacy concerns.
Who is in charge of Libra?
The currency will be serviced by a collective of companies called the “Libra Association”. It functions as what is known as a “stablecoin”, pegged to existing assets like the dollar or euro, in the aim of making it less subject to the volatility that many cryptocurrencies experience.
The Libra Association is described by Facebook as an independent, not-for-profit organisation based in Switzerland. It serves two main functions: to validate transactions on the Libra blockchain and to manage the reserve Libra is tied to and allocate funds to social causes.
The risk and reward of building the new PayPal
In cryptocurrencies, Facebook saw both a threat and an opportunity. They held the promise of disrupting how things are bought and sold by eliminating transaction fees common with credit cards. That comes dangerously close to Facebook’s ad business that influences what is bought and sold. If a competitor like Google or an upstart built a popular coin and could monitor the transactions, they’d learn what people buy and could muscle in on the billions spent on Facebook marketing. Meanwhile, the 1.7 billion people who lack a bank account might choose whoever offers them a financial services alternative as their online identity provider too. That’s another thing Facebook wants to be.
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.
- You Might what to ask if its safe to use the Facebook Libra Crypto Currency:
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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’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.
Now In Brief, Let me quickly show you how the Facebook Libra Crypto Currency Works:
Question: How does Libra work?
Answer: 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 more than 100 pages of documentation on Libra and Calibra, and we’ve pulled out the most important facts. Let’s dive in.
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