AFacebook has finally announced the details of its cryptocurrency – Libra. While Libra is currently being developed, Facebook hopes that it will transform the global economy. The company also intends to share control of this cryptocurrency with several organizations including credit card companies, VC firms and tech giants.
So, what exactly is Libra? To explain in short, it is a cryptocurrency that allows people to send money all across the world with almost zero fees. However, there’s much more that you should know about Facebook Libra. Let’s take a look.
Who will control Libra?
Facebook won’t have complete control over Libra. Rather, the company will only get 1 vote in the governance of the cryptocurrency. Other founder member organizations of the Libra Association including Uber, Visa and others who have invested $10 million each will also get a single vote.
The Libra Association will also be promoting open sourced blockchain as well as a development platform by introducing Move – it’s very own programming language. Moreover, the association will also tie up with businesses to accept Libra as payment and offer customers rewards or discounts.
How Libra can be used
Libra works just like other cryptocurrencies. You can cash out or buy Facebook Libra at exchange points including retail and grocery stores, or spend Libra using various third-party wallet apps. The company also plans to integrate its own Calibra Wallet into WhatsApp, the Facebook app and Facebook Messenger as well.
Facebook will also be launching a subsidiary company – Calibra, to handle crypto dealings and protect users’ privacy. The company will be responsible for keeping Facebook data separate from Libra payments to prevent ad targeting.
As a Libra user, your real identity will never be tied to publicly visible transactions that you make. However, all founding members of the Libra Association will earn some interest on money that users cash in. This will be done to keep the value of Libra stable.
The risk and reward of Libra
Facebook made a bold move by venturing into cryptocurrencies. Libra is a global digital currency that aims to promote financial inclusion for the unbanked. Libra has more decentralization and privacy features built-in than many people may expect.
Instead of trying to dominate the market, Facebook is playing a long-term game with Libra. The company is looking to pull payments into the online domain. By getting more businesses to use Libra, Facebook will encourage them to buy more ads for the platform. This falls in-line with Facebook’s Ads business as well.
Facebook intends to make Libra the transformation and evolution of PayPal. The company is working towards making Libra more ubiquitous as a payment mode, simpler to setup, more accessible to the unbanked, more efficient with lower fees, more long-lasting through decentralization and more flexible, thanks to developers.
What Facebook has to say
In the official documentation, Facebook has mentioned that Libra will be a big improvement on current payment modes. It will allow all users to make transactions very easily – whether it is buying coffee or paying rent. Furthermore, because Libra will promote lower fees, the company hopes to include users from all financial capabilities.
Libra can also be used to power microtransactions. Typically, people refrain from making microtransactions on credit cards because of the fees attached. This won’t be a problem with Libra as the fees will only cost a few cents. Similarly, Libra can also help replace pre-paid transit passes.
However, it’s still too soon to say whether Libra will be a success or not. Facebook has a reputation for building over-engineered and unused products. The company will need to play its cards properly if it wants to replace what is already in your pockets.