Facebook recently announced a digital currency called Libra that will be rolling out for users in 2020. This new feature will allow billion of users on the platform to make financial transactions across the globe. The use of this technology could potentially change the landscape of digital banking, globally.
What is Libra and how did the name originate?
According to Facebook, Libra is a global currency and financial infrastructure, which is a digital asset built by Facebook and is powered by the new Facebook created version of blockchain that is very much like the encrypted technology used by bitcoin and other cryptocurrencies. Libra is a name that comes from the basic Roman measurement of weight and lb abbreviation for pound is derived from Libra.
Why has Facebook decided to launch a cryptocurrency and who is in charge of Libra?
Facebook launched Libra with the aim of connecting 1.7 billion people around the world with no access to the bank account, but the US Senate has asked the company CEO Mark Zuckerberg for clarification on privacy concerns.
Libra us a currency that will be serviced b ya collective companies called 'Libra Association' and will function as a “stablecoin” that will be pegged to existing euro or dollar, which will help it be less volatile, unlike other cryptocurrencies.
Libra Association is an independent, not-for-profit organisation that has its base in Switzerland. It has two main functions to it that validate transactions on the Libra blockchain and manage its reserves tied to allocate funds to social causes.
There will be a governing body called Libra Association Council that will have representatives of each member of the association to vote on operating decisions and policies.
According to Facebook, as soon as the currency is launched in 2020, the company will withdraw from the leadership role, allowing all members of the association to have equal votes in the governance of Libra.
The founding member of Libra Association will be the companies who contributed a minimum of $10M, which include companies like Ebay, PayPal, Uber, Spotify and Lyft. Other financial and venture capital firms include Visa, Thrive Capital, Andreessen Horowitz and Mastercard.
How to use it and what could you buy?
As soon as Libra launches, users can download a digital wallet called Calibra that will also be available in WhatsApp, Messenger and other standalone apps.
Apart from app transactions, Facebook could facilitate Libra use at various vendors for everyday transactions.
Lyft and Uber being early investors could perhaps allow users to pay for services on the app via Libra.
Facebook said that Libra will be sustained via small charge per transaction on the blockchain of which many of these charges will be transferred to vendors who could absorb the costs themselves.
Will it be safe?
Facebook cryptocurrency has a lot of privacy concerns regarding the financial app, but the company said that it will be implementing technologies to prevent fraud and money laundering. There will also be a 'live support' access to help users that lost money via fraud, for which the company will offer refunds.
Libra Blockchain will be built on the open source code that will allow developers to the research community for monitoring the design and security flaws. There will also be a bug bounty program to point out limitations in the platform.