Mark Zuckerberg, the co-founder and CEO of Facebook recently announced a digital currency. The digital currency is called Libra and they plan to roll it out in 2020. According to Facebook, it will allow the platform’s billions of users across the globe to make financial transactions online. This new cryptocurrency has been the subject of a lot of controversies and has already begun to be under a lot of scrutinies. On this post, we would be talking about Libra and what you need to know about it.
What is Libra?
According to Facebook, It is a “global currency and financial infrastructure.” It is basically a digital asset built by Facebook and it is powered by a new Facebook-created version of blockchain. The cryptocurrency allows users to exchange fiat currency for Libra for use in online transactions. With the digital asset, users don’t require a bank account or credit card. All they need to do is convert money into or out of Libra to us it.
According to Facebook, they launched this digital asset because there are about 1.7billion people all over the world who don’t have access to a bank account. They plan to use this digital asset to reach them all. According to Facebook, the goal of this digital asset is to eliminate transaction fees and create a universal payment system which is capable of quickly transacting payments around the world.
Who is in charge of Libra?
The digital asset will be serviced by a collective of companies called the “Libra Association”. According to Facebook, this association is an independent, not-for-profit organization based in Switzerland. They serve two main functions:
- They validate transactions on the currency’s blockchain
- Manage the reserve the currency is tied to and allocate funds to social causes.
The association is made up of partner companies and some of these partners are payment processors. They include companies like Visa, Mastercard, and PayPal. Facebook also stated that within the association will be a governing body called the Libra Association Council. It will be comprised of a representative of each member of the association. These reps will vote on policy and operating decisions.
How does it work?
Unlike other cryptocurrencies, it is centralized and computed entirely by Libra validator nodes (which are managed by the association). The validator nodes use a system called Byzantine fault tolerance, this system maintains accuracy and prevents double-spend attacks.
Also unlike other cryptocurrencies, it is tied to fiat currencies, which are backed by the governments that issue them. This includes the U.S. dollar, the euro, the yen and others. It will also be backed by a reserve of real assets, including a basket of bank deposits and short-term government securities. This would make Libra a stable currency.
How will I get Libra?
Facebook is yet to go into details on how it would be available after the launch. Some say they will take the hybrid approach. They may let users simply buy it or/ and they make give out small amounts for free to help kick start it.
How can I use it?
Facebook plans to launch a digital wallet called Calibra. It will allow users to send it to anyone with a smartphone. Calibra will be available in Messenger, WhatsApp, and as a standalone app.
What can you buy with it?
Facebook plans to facilitate the use of Libra at various vendors for day-to-day transactions.
Is this safe?
Many people have raised privacy concerns regarding a digital asset being run by Facebook. They have said that they will implement technologies to prevent money laundering and fraud. Facebook also plans to have “live support” to help users who lose access to accounts and, if a user loses money through fraud, Facebook has offered refunds. Libra Blockchain will also be built on open source code that allows the developer and research community to monitor it for design and security flaws. They also plan to implement a “bug bounty” program to incentivize security experts to point out vulnerabilities in the platform