Meet Libra, Facebook's cryptocurrency
Last week, Facebook Inc. unveiled its plans for a new global cryptocurrency: Libra. Developed in Blockchain, this new digital coin will be launched in 2020 and has everyone talking about the pros and cons of technology applied to finances. Whatsapp, Instagram and Messenger users (amongst others) will be the first to try it, and at first stages, this currency will let its users make any kind of transaction through these apps.
This is huge. Disruptive technology has the chance to change anything we know about banking and commerce. If this company is adopted by many people and businesses, it could really be life-changing. The plans for this coin are to let people not only use it in Facebook-related apps but also to shop in e-commerce using Libra.
Is it the same as Bitcoin? Well, not exactly.
Some people have compared it with Bitcoin, but one of the main differences is the fact that stability is almost guaranteed with Libra due to being supported by transnational companies and government organizations through a reserved fund. The 28 soon-to-be founding members of the association and their industries include:
Payments: Mastercard, PayPal, PayU, Stripe, Visa
Technology and marketplaces: Booking Holdings, eBay, Facebook/Calibra, Farfetch, Lyft, Mercado Pago, 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
Also, Bitcoin is recorded on a public blockchain, while to develop Libra apps, people must ask permission to do so. The Libra association (Facebook and its partners) back this coin with a pool of real money, which it’s supposed to make it more stable and secure, and the cryptocurrency can always be changed for cash, allegedly. Bitcoin was made to become a transactional platform like Libra, but today it's seen as an investment and store-of-value, though.
Facebook's issues with privacy and trust
Everyone remembers the Cambridge Analytica scandal, since then Facebook has had trouble with new user acquisition and permanence. To prevent that from happening with Libra, they've come up with Calibra, a digital wallet that has no connection with your Facebook, Whatsapp or Instagram data, unless you give it permission. The information you share here won't be used for marketing purposes or make Facebook earn money directly, and you don't need to have a Facebook or Whatsapp account to use Libra either.
The story behind the name and the mission
Libra's name comes from the word for a Roman unit of weight measure, and it's also a Zodiac sign that means "justice." Also, by referring to "Lib", the French word for "Free" (spelled "libre"), it has a sense of financial freedom to it. The logo and symbol consist of three tildes placed on top of each other, and it's represented by the Unicode character ≋.
Libra's mission, as its whitepaper says, is to include the 1.7 billion adults globally that still remain outside of the financial system with no access to a traditional bank, although one billion of them have a mobile phone and nearly half a billion have internet access. The mission for Libra is to become a global currency and financial infrastructure. Libra's plan to create a more inclusive financial system consists of three parts:
- 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.
The whitepaper also indicates that it needs to be able to scale to billions of accounts (through low latency and a high-end storage system), it needs to be highly secure and flexible to take in consideration future innovation in financial services.
Libra will be available to the public until 2020 and it still has a lot to be analyzed, what do you think of it? Would you change the way you make transactions by relying on Facebook? Let us know.
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