The word cryptocurrency has been flying around for years now with an increase in the users of bitcoin and other cryptocurrencies and the “gold rush” to quickly invest and cash out as soon as possible. Over the past year, Facebook as a company has dropped hints on it’s developing a cryptocurrency that makes sending money as easy as sending a photo: digital, immediate, free and secure.
On Tuesday 18th June, the company formally unveiled its highly-anticipated digital currency project called Libra. Facebook also announced the creation of the Libra Association, an independent organization that will manage the currency, and Calibra, a unit of Facebook that will build applications related to the new digital currency.
As part of the announcement, Facebook launched a test version of its blockchain, the technology upon which cryptocurrencies like bitcoin are built. It is open-source software, meaning developers can experiment with building applications on the platform and submit feedback on the code. The currency itself is set to launch in 2020.
“Libra’s mission is to be a simple, global currency and financial infrastructure that empowers billions of people,” said Facebook’s David Marcus, who runs Calibra and headed up the Libra project. One of the aims of the project is to help the 1.7 billion people around the world who don’t have bank accounts access a stable currency and financial services.
Details about Libra
Libra will let you buy things or send money to people with nearly zero fees. You’ll pseudonymously buy or cash out your Libra online or at local exchange points like grocery stores, and spend it using interoperable third-party wallet apps or Facebook’s own Calibra wallet that will be built into WhatsApp, Messenger and its own app. Facebook also released its white paper explaining Libra and its testnet for working out the kinks of its blockchain system before a public launch in the first half of 2020.
Facebook won’t fully control Libra, but instead get just a single vote in its governance like other founding members of the Libra Association, including Visa, Uber and Andreessen Horowitz, which have invested at least $10 million each into the project’s operations.
Also, Facebook is launching a subsidiary company called Calibra that handles its crypto dealings and protects users’ privacy by never mingling Libra payments with Facebook data so it cannot be used for ad targeting. An individual’s real identity won’t be tied to their publicly visible transactions.
It’s hoping Libra will become simpler to set up, more ubiquitous as a payment method, more efficient with fewer fees, more accessible to the unbanked, more flexible thanks to developers and more long-lasting through decentralization when compared to PayPal.
Facebook CEO Mark Zuckerberg explained some of the philosophy behind Libra and Calibra
“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.”Mark Zuckerberg
Though Facebook’s large user base will give the cryptocurrency broad exposure initially, the effort’s success will depend on consumers being able to do more than just use Libra on Facebook’s platforms. It is believed that stability will be essential for the mainstream adoption of Libra. According to Union Square Ventures Partner Fred Wilson. “People don’t want to transact in a cryptocurrency that’s not price stabilized,” Wilson said. “They don’t want to make payments in a currency that could go way up and they don’t want to earn in something that could go way down.”
Featured image source: The Verge