After much speculation and deliberation, Facebook shared the news of launching its own digital currency on Tuesday. It has been named as Libra. It is expected to be launched in the mid-2020 permitting Facebook’s billions of users across the continents make easier monetary transactions via Messenger and Whatsapp.
The launch of this cryptocurrency is expected to alter the banking landscape and has already fallen under the ambit of scrutiny. But what is the whole buzz about? Let’s try to understand:
What is Libra?
To quote the words of Facebook, Libra is a “global currency and financial infrastructure”. To explain it in simpler words, it is a digital asset put together by Facebook and induced by a new Facebook-created version of blockchain, the technology used by bitcoin and other cryptocurrencies. With the launch of Libra, Facebook claims to take 1.7 billion people around the globe under its ambit who do not possess access to feasible banking options.
How will Libra be operating?
The to-be launched currency will be functioned with the help of a collection of companies known together as the “Libra Association”. Facebook has described it as an independent, not-for-profit organization which will be based in Switzerland. It will essentially be facilitating two main purposes:
- Validating the transactions that will be taking place on the Libra blockchain
- Managing the reserve Libra is tied to and allocate funds to social causes
The Libra Association has Facebook and 27 other partners like Visa, MasterCard, PayPal, Coin base, Uber, Lyft and venture capitalist firms like Andreessen Horowitz and Union Square Ventures.
What is Calibra?
Facebook is also kicking off with a subsidiary company, Calibra, which will make products and services based around Libra. It is through Calibra that Facebook plans to making monetary benefits out of the cryptocurrency, and it’ll be starting with the launch of its digital wallet. Calibra will also take care of the Libra integrations for Facebook’s other products.
How and Where Can It Be Used?
Once the currency is launched, users will have to download Calibra, the digital wallet to store and transact Libra. The calibra will allow users to use Libra to send and receive from anyone.
What Makes Libra Different Than Other Crypto currencies?
Though Libra as well as other crypto currencies are based on the technology of blockchain, Libra is still quite distinct. Amidst many other difference in terms of privacy, value, etc., the major difference that lies is: unlike other crypto currencies like Bitcoin, Libra is not meant to serve the investment purpose but will rather act as a means of paying for goods. Libra is expected to become a fiat currency instead of cryptocurrency.
Will Libra be Safe?
The to-be-launched cryptocurrency has raised a lot of concerns on its privacy front. Facebook has said it will be taking the help of all the technologies to avoid money laundering and fraud. Facebook has shared that it 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 behavior.
It is also likely to have the system of “live support” to help users who lose access to accounts and, if a user loses money through fraud, Facebook has offered refunds.
Libra will be set up on an open source code which implies that it will allow the developer and research community to monitor it for design and security flaws, and Facebook will implement a “bug bounty” program to incentivise security experts to point out vulnerabilities in the platform.