Cryptocurrency has always been a fascinating subject and even Mark Zuckerberg could not resist the virtual currency industry. Yesterday, Facebook together with more than 25 organizations, including Uber, Visa, eBay, Master, etc. announced the launch of a new cryptocurrency called the Libra.
In a Facebook post, Zuckerberg said that Libra's mission is to create a simple global financial infrastructure that will enable millions of people around the world. It is powered by blockchain technology and the plan is to launch it in 2020.
“We strive to make it easy for everyone to send and receive money, just as you use our apps to instantly share messages and photos. To make this possible, Facebook is also launching an independent subsidiary, Calibra, which will build services that allow you to send, publish and store Libra, "he added.
The announcement has made a lot of noise, both among people who have the cryptocurrency community and those who don't. It is likely to create an important acceptance drive for cryptocurrency among smartphone users.
Here are the five things you need to know about Facebook's cryptocurrency Libra:
Calibra - the digital wallet from Facebook
Calibra, the new subsidiary of Facebook, allows users to participate in the Libra network. The wallet is integrated with Messenger, WhatsApp and an independent app.
The digital app, which will be launched next year, allows users to send Libra immediately to any smartphone user with an active internet connection. Facebook on its company blog said the technology company hopes to offer additional services for people and businesses over time, including services that pay bills at the touch of a button, buy a cup of coffee with a code scan or drive with your local public transit without having to take cash or a metro card.
As we all know, Libra is built on a decentralized platform powered by blockchain technology. This means that the platform will be managed by many organizations, unlike only Facebook. This consortium is called the Libra Association.
The co-founding members of the association are payment service providers Paypal, Visa, Mastercard, Stripe and PayU. Apart from Facebook, technology and market places, this initiative also includes Booking Holdings, E-bay, Farfetch, Lyft, Uber, Mercado Pago and Spotify. Telecommunication players Illiad and Vodafone together with blockchain companies - Coinbase, BisonTrails, Xapo and Anchorage are also in demand.
Finally, the Libra Association also includes investment firms - Andreessen Horowitz, Union Square Ventures, Creative Destruction, Ribbit Capital and Thrive Capital with a non-profit organization such as Women's World Banking, Kiva - 501 and Mercy Corps.
Zuckerberg hopes that the association will have at least 100 additional organizations by the time the cryptocurrency is introduced next year.
Built on a reserve
Unlike most cryptocurrencies, including Bitcoin and Ethereum, Libra is supported by a reserve of real assets that users can trust in the currency.
According to libra.org, a white paper discussing the details of cryptocurrency, "a basket of currencies and assets will be kept in the Libra reserve for each created scale, building trust in its intrinsic value." avoid speculation and price fluctuations, since users can predict its value or in other words, the reserve helps maintain value.
The reserve will be built from two sources - investors and users of Libra. In order to encourage acceptance among its users, the association will also pay incentives in Libra to its founding members.
On the other hand, the reserve will be invested in low-risk assets, such as bank deposits and government securities that will yield interest over time.
Data Privacy
Recently, data privacy has been a major issue with the Facebook user and Libra and Calibra are undoubtedly under the scanner.
To free up the air around it, Zuckerberg will build in his post shared privacy and security in every step and Calibra has a dedicated team of risk management experts to prevent fraud.
“We offer protection against fraud, so if you lose your Libra coins, we will offer you your money back. We also think it's important that people have choices, so you have the option to use many other third-party portfolios on the Libra network, "he added.
Can you use it in India?
The currency has yet to be introduced. That said, if the virtual currency was launched or will be launched in the coming months, you would still not be able to use it, because the RBI has foreclosed the banks from stopping the cryptocurrency trade in the country.
According to various news websites, the commission led by Subhash Chandra Garg has recommended a prison sentence for users of cryptocurrencies, including miners, exchanges, traders, etc. But there is no official word about this.
So what now? Let us hope that the new Finance Minister Nirmala Sitharaman has a different point of view than the former FM Arun Jaitley, so that there is regulation that would guarantee fair trade on the Indian cryptocurrency market, rather than a general ban.
Keep our fingers crossed!