Facebook announces cryptocurrency Libra
Facebook have announced a digital currency called Libra. It is to launch in 2020 and will allow billions of Facebook & Whatsapp users worldwide make financial transactions online.
What is Libra?
Bitcoin and other cryptocurrencies use an encrypted technology called “blockchain”. Libra will be a digital currency built by Facebook and powered by a new Facebook created version of blockchain. Facebook say Libra will be a “global currency and financial infrastructure”.
Why is Facebook launching a cryptocurrency?
Facebook claims it wants to reach the 1.7 billion people around the world who do not have access to a bank account. Only a company of Facebook’s size and wealth could realistically take this on, it could be a massive moneymaker for Facebook.
For example, consider the vast number of transactions that take place between people from one currency to another, and the companies charging a large fee (I’m looking at you MoneyGram and Western Union) to facilitate this conversion – with the customer using Whatsapp in a lot of cases to alert the person receiving. It could lower these fees to almost nothing. Facebook has long seen this type of intertwined practice as opportunity for growth.
Who runs Libra?
The currency will be serviced by a collective of companies called the “Libra Association”, which has been described by Facebook as an independent, not-for-profit organisation based in Switzerland. It serves to validate transactions on the Libra blockchain and to manage the reserve Libra is tied to and allocate funds to social causes.
The companies listed as founding members of the Libra Association include PayPal, Ebay, Spotify and Lyft.
How can I use Libra?
When Libra launches, users can download Calibra, a digital wallet, that will allow them to send it to anyone with a smartphone. As well as the standalone app, it will be available in Messenger and WhatsApp.
What can I buy with Libra?
Calibra, the digital wallet, will launch allowing users to send money to and from each other. But Facebook also wants to facilitate the use of Libra for day-to-day transactions. As Ebay, Spotify, Uber and Lyft are investors in the project it would suggest you will be able to pay for those services using Libra. It’s not a major leap to suggest that Facebook may use Libra to facilitate transactions within their advertising platform.
How will Libra make money?
Facebook have announced there will be a small charge per transaction on the blockchain.
Will Libra be safe?
The million dollar question. Facebook have been hit with one scandal after another in the last couple of years. Facebook said it will implement technologies to prevent money laundering and fraud. But obviously there will be massive privacy concerns around a currency run by Facebook and the amount of data it will hold on 2.4 billion users.