Facebook announced a new digital currency on Tuesday (18-06-2019) called “Libra.” The company is partnering with 27 other businesses and organizations to start the crypto as an open-source currency. The currency will roll out for use in 2020 and allow the platform’s billions of users across the globe to make financial transactions online.
ALSO, CHECK OUT THE INFOGRAPHIC BELOW BY mrbtc.org on LIBRA
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.
The plan is for a new Swiss-based non-profit foundation, comprised of 100 private sector and civil society members with equal voting rights, to launch Libra in the first half of 2020.
Facebook said the design of Libra would allow individuals to store, spend and transfer money with close to zero transaction fees. Libra is partly targeted at the $613bn annual market for cross-border remittances.
“Just as people can use their phones to message friends anywhere in the world today, with Libra, the same can be done with money — instantly, securely and at low cost,” Facebook said.
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.
Within the Libra Association will be a governing body called the Libra Association Council, comprised of a representative of each member of the association, which will vote on policy and operating decisions.
Facebook claims that although it created the Libra Association and the Libra Blockchain, once the currency is launched in 2020 the company will withdraw from a leadership role and all members of the association will have equal votes in governance of Libra.
The companies who contributed a minimum of $10m(£8m) to be listed as founding members of the Libra Association include tech companies such as PayPal, Ebay, Spotify, Uber and Lyft, as well as financial and venture capital firms such as Andreessen Horowitz, Thrive Capital, Visa and Mastercard.
How can you buy and use Libra?
Facebook said any company could build a “wallet” to hold Libra. Its own service will be a subsidiary called Calibra, which will be integrated into Facebook’s family of apps and will also be available as a standalone app. Calibra will partner with “authorised resellers” of Libra, cryptocurrency exchanges and liquidity providers to help people change money into Libra seamlessly within the apps.
Libra will be available for Messenger and WhatsApp users around the world, and anyone who downloads the (yet-to-launch) app. Facebook says it has the lofty goal of bringing financial services to the 1.7 billion around the world who still don’t have bank accounts. Libra will let you send money to almost anyone with a smartphone, as easily as a text message and at “low to no cost,” Facebook says.
The social network has published a white paper explaining how Libra will work, although it won’t actually launch until the first half of 2020.
THIS IS HOW LIBRA WORKS
Libra is a global, digitally native, reserve-backed cryptocurrency built on the foundation of blockchain technology. People will be able to send, receive, spend, and secure their money, enabling a more inclusive global financial system.
The unit of currency is called Libra. The aim is to make Libra as widely accepted and as easy to use as possible to create a currency that people can use with confidence and convenience in their everyday lives.
Unlike the majority of cryptocurrencies, Libra is fully backed by a reserve of real assets. A basket of currencies and assets will be held in the Libra Reserve for every Libra that is created, building trust in its intrinsic value.
The Libra Blockchain is operated by a network of validator nodes. The evolution of the blockchain will be overseen by the Founding Members of the Libra Association, and each member will be responsible for running a validator node. As the network grows and becomes more self-sustaining, the Libra Association will work to gradually transition to a permissionless mode of operation.
Mark Zuckerberg in his statements
Today, Facebook is coming together with 27 organizations around the world to start the non-profit Libra Association and create a new currency called Libra.
Libra’s mission is to create a simple global financial infrastructure that empowers billions of people around the world. It’s powered by blockchain technology and the plan is to launch it in 2020. You can read more about the association here: https://libra.org
Being able to use mobile money can have an important positive impact on people’s lives because you don’t have to always carry cash, which can be insecure, or pay extra fees for transfers. This is especially important for people who don’t have access to traditional banks or financial services. Right now, there are around a billion people who don’t have a bank account but do have a mobile phone.
We aspire to make it easy for everyone to send and receive money just like you use our apps to instantly share messages and photos. To enable this, Facebook is also launching an independent subsidiary called Calibra that will build services that let you send, spend and save Libra — starting with a digital wallet that will be available in WhatsApp and Messenger and as a standalone app next year.
Calibra will be regulated like other payment service providers. Any information you share with Calibra will be kept separate from information you share on Facebook. From the beginning, Calibra will let you send Libra to almost anyone with a smartphone at low to no cost. Over time, we hope to offer more services for people and businesses — like paying bills with the push of a button, buying coffee with the scan of a code, or riding local public transit without needing to carry cash or a metro pass.
In addition to our efforts, many other companies will build their own services using Libra — from payment companies like Mastercard, PayPal, PayU, Stripe and Visa, to popular services like Booking, eBay, Farfetch, Lyft, Spotify and Uber, to non-profits doing important work around financial inclusion like Kiva, Mercy Corps and Women’s World Banking, to companies in the crypto space like Anchorage, Coinbase, Xapo, and Bison Trails. A number of leading Venture firms are also joining to help drive innovation on the Libra network. We’re hoping to have over 100 cofounding members of the Libra Association by the time the network launches next year.
All of this is built on blockchain technology. It’s decentralized — meaning it’s run by many different organizations instead of just one, making the system fairer overall. It’s available to anyone with an internet connection and has low fees and costs. And it’s secured by cryptography which helps keep your money safe.
This is an important part of our vision for a privacy-focused social platform — where you can interact in all the ways you’d want privately, from messaging to secure payments.
Privacy and safety will be built into every step. For example, Calibra will have a dedicated team of experts in risk management focused on preventing people from using Calibra for fraudulent purposes. We’ll provide fraud protection so if you lose your Libra coins, we’ll offer refunds. We also believe it’s important for people to have choices so you’ll have the options to use many other third-party wallets on the Libra network.
There’s still a lot more to learn and do before Libra will be ready to officially launch. We know it’s a major undertaking and responsibility — and we’re committed to getting this right. We’ve been working with policymakers and experts in areas like financial inclusion, economics, security, privacy and blockchain, and we’ll continue listening to their feedback as we figure out the best way to move forward. We’re thankful for their partnership, and for all the businesses, organizations, and academic institutions that are part of the Libra Association.
This is the beginning of an exciting journey and I’m looking forward to sharing more soon.
Who is backing Libra so far?
Payments: Mastercard, PayPal, PayU, Stripe, Visa
Tech and consumer: Booking Holdings, eBay, Facebook, Farfetch, Lyft, Mercado Pago, Spotify, Uber
Telecoms: Iliad, Vodafone
Blockchain: Anchorage, Bison Trails, Coinbase, Xapo Holdings
Venture Capital: Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital, Union Square Ventures
NGOs: Creative Destruction Lab, Kiva, Mercy Corps, Women’s World Banking