On Tuesday (18 June) Facebook reveals plans for its cryptocurrency Libra, formerly speculated to be called ‘GlobalCoin’.
Together with 27 other global organisations, Facebook will create the non-profit Libra Association that is headquartered in Geneva, Switzerland, and will “govern its new digital coin set to launch in the first half of next year”.
As Seedly aptly put it, the Libra Association is like the “MAS equivalent” of the digital currency, except that it’s made up of a group of private institutions and businesses.
Libra’s vision is to be “as widely accepted and as easy to use as possible” for people to use with confidence and convenience.
Facebook wants to serve the unbanked, stating that there are about “a billion people who are don’t have a bank account but do have a mobile phone”.
e-Wallet To Hold Your Libras
CEO of Facebook, Mark Zuckerberg said in a post that the new digital currency will be accompanied with the launch of independent subsidiary, Calibra, a digital wallet that lets you send, spend, and save Libra.
Calibra will be available in WhatsApp and Messenger and as a standalone app next year, Zuckerberg said.
He assured that Calibra will be regulated like other payment service providers; information shared with Calibra will be separate from information shared on Facebook.
Zuckerberg added that the e-wallet will let the user “send Libra to almost anyone with a smartphone at low to no cost”.
They hope to let people and businesses pay easily for day-to-day necessities such as coffee, bills, or taking the local public transport.
“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.”
The currency, Libra, is described as a ‘stablecoin’, that will be “fully backed by a reserve of real assets — the Libra Reserve — and supported by a competitive network of exchanges buying and selling Libra”, the Libra White Paper read.
But this doesn’t mean that the value of a Libra is pegged to a certain fiat currency (like, USD, for example) and it won’t be equivalent to the rate of that fiat currency.
The Reserve will be backed by a collection of low-volatility assets, such as bank deposits and short-term government securities in currencies from stable and reputable central banks, the White Paper explained.
Libra’s value will fluctuate according to the movement of these assets.
The White Paper assured that “holders of Libra can trust the currency’s ability to preserve value over time”.
Security For Libras, Privacy For Users
In his statement, Zuckerberg assured and emphasised on the privacy and security of the currency and app.
He wrote that due to the decentralised nature of blockchain, Calibra will be secured by cryptography that helps keep users’ 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,” he wrote.
Calibra will also offer refunds if users lose their Libra coins as part of their fraud protection plan.
Users will also have the option to use other third-party wallets on the Libra network.
The Libra blockchain technology will apparently be able to handle 1,000 transactions per second, compared to Bitcoin’s seven transactions per second or Ethereum’s 15 transactions per second.
According to Zuckerberg, partner companies such as Mastercard, PayPal, Visa, Uber, Spotify, Mercy Corps, Coinbase, and Booking Holdings, among others, will build their own services using Libra.
A handful of venture capital firms are also onboard to “help drive innovation on the Libra network”.
The social media giant hopes to have over 100 members be a part of the Libra Association by the launch next year.
They are also open- sourcing the code for the Libra Blockchain and launching Libra’s initial testnet for developers.
Featured Image Credit: Libra, CBS News