Facebook created a cryptocurrency by the name Libra and they have started an organization called The Libra associations as well. The goal of the organization would be to manage all of the technical aspects of this project and to ensure that everything is as it should be as well. Libra is also equipped with some safeguards which have already been tested and used in real situations which make sure that the cryptocurrency stays stable. Facebook is also set to create a wallet called Calibra.
David Marcus, the person running this project for Facebook has stated that Libra is starting with less than a full blockchain but emphasized that it has plans to move on to a fully open system, permissionless and he said that Facebook will be just one of the voices behind Libra which means that it won’t have any special responsibility over the Libra Network.
People are still guessing whether Libra will be successful or just fizzle but the size of Facebook and use of it in developing countries is a valid support that might get people on board. Especially so if it can create the services that people want to use.
However, cryptocurrencies haven’t really lived up to the hype in general, they haven’t upended the conventional finance yet.
Libra is going to be launched in the first half of the next year and before that it may get some questions from the lawmakers of US and Europe. David Marcus is also set to testify before the Senate and the House about the project. Lawmakers have stated that it won’t be easy for him to prove that there are no major privacy concerns of the cryptocurrency.
Why Does Facebook Want a Cryptocurrency?
The cryptocurrency doesn’t exactly belong to Facebook. It’s a project from the Libra association and Facebook co-founded it which is why people often confuse it. The association will be the monetary authority behind the Libra cryptocurrency which is set to empower people who don’t have bank accounts yet.
Facebook, however, does have its own interest in digital cash which predates the new, Libra cryptocurrency. They used to have a virtual currency which was called Credits. It ran for four years and it was a way to pay for games on Facebook. Mark Zuckerberg stated that sending money online should be as simple and easy as sending photos which is what Libra is attempting to do. This also may attract new people to the social network. Libra will make it easier and cheaper for people to transfer money online.
Facebook can also have some bigger plans for this cryptocurrency but it hasn’t shared these plans yet. The new subsidiary called Calibra will run the wallet for the Libra cryptocurrency which will be necessary in the initial times.
“Libra is designed to make it easier and cheaper for people to transfer money online, which might attract new users to the social network. The services it will include will likely be games and commerce,”says Oleg Gustaf, a business writer at Draftbeyond.com and Researchpapersuk.com
Does Facebook Have Direct Control Over Libra?
In essence, no, it doesn’t. Facebook is just one of the members of the Libra Association and this is a nonprofit which will be the monetary authority for the currency. Facebook has the membership through the subsidiary Calibra. Other members of the Libra Association include MasterCard, PayPal, Visa, eBay, Uber, Mercy Corps and Vodafone.
The association has hopes to grow to 100 members. Each member has to invest $10 million to get the project going.
Every member of the Libra Association has the same vote in the project and the project itself as its headquarters in Switzerland. Facebook won’t have any special vote there or any more say than any other member.
But Facebook will still play a bigger role in the initial phases of the Libra project because it will run the Calibra wallet and it will need to maintain a leadership role until the project is launched, after which it will have the same role as all other members.
What Makes Libra Different Than Other Cryptocurrencies?
To get started, let’s review how Libra is similar to other cryptocurrencies.
- It’s entirely digital
- The transactions will be recorded on a software ledger – the blockchain
- It will be a fully open system in the future
“But unlike other cryptocurrencies, it will be backed by a basket of assets like bank deposits and government securities in stable currencies from stable central banks,”says Alexa Fui, a financial blogger at Lastminutewriting.com and Writinity.com.
Ashley Halsey is a cryptocurrency writer at Luckyassignments.com and Gumessays.com, who has been involved in many projects throughout the country. Mother of two children, she enjoys travelling, reading and attending business training courses.