Libra: Everything you need to know about Facebook’s cryptocurrency

Launched in 2020, it will make it possible to transfer money via Facebook Messenger or WhatsApp and shop on different platforms.

Facebook officially announced on Tuesday, June 18 that it plans to launch a cryptocurrency called Libra in mid-2020. manual.

Encrypt what?
Change. We are talking about electronic money here, which is not backed by a state or central bank and operates in a decentralized manner thanks to digital technology.

Bitcoin was born in 2009 as the first cryptocurrency to be launched, and it is the most well-known today. Since then, cryptocurrencies based on “blockchain” technology (information storage and transmission) and its consequences have multiplied and sparked many debates and questions about their operating model. In addition to huge profits, cryptocurrencies also generate massive losses that have the potential to fundamentally change the rules of money circulation.

Facebook is entering the space by announcing the contours of its own cryptocurrency, Libra, partnering with about 20 international companies to manage its stability and governance. The project is managed at Facebook by David Marcus, who formerly headed PayPal.

Libra, what’s the use?
Specifically, when Facebook’s currency launched, Libras could be purchased online with any type of currency. But there’s also cash, brick-and-mortar points of sale. The price of Libra is not yet known.

With this currency, Facebook hopes to allow its users to send money to someone “as easily and instantly as a message” from their smartphones, we can read in the press release. That is, no matter where the person will live, there will be little or no transfer fees.

Internet users can also use the library to purchase goods and services, such as on e-commerce sites or apps. The Libra project has already involved companies like Uber, eBay, Spotify, or Booking, and it’s easy to imagine using the currency on their respective platforms is possible.

“Over time, we hope to add other services for individuals and businesses, such as paying a bill with the push of a button, paying for a coffee by scanning a code, or taking public transportation without carrying cash or a transportation ticket,” Facebook explained road.

All of this can initially be done through Facebook’s upcoming subsidiary and its own payments app: Calibra (should look like Apple Pay or Google Pay). But Facebook also plans to integrate installments or payments in Libras directly into its Messenger and WhatsApp apps.

The first image of Calibra. The app will transfer Libra. FACEBOOK
What does it bring over existing payment methods?
Facebook emphasized that, unlike current remittance systems, transactions will be instant and cheap. What’s more, Libra can also be used by the unbanked. Facebook insists strongly on this, suggesting it is the first target audience: “Half of the world’s adults are unbanked,” specifying the company, adding that the percentage is higher in developing countries and affects mostly women. The “challenge” Facebook wants to take with Libra — and an opportunity to communicate about “positive” contributions to the project.

Libra’s offensive power is also based on its advertised ease of use, through apps that are widely used around the world: Facebook’s “family” of apps has more than 2 billion daily active users.

Will this cryptocurrency fluctuate like Bitcoin?
Theoretically not, because unlike Bitcoin, Libra will be backed by relatively stable currencies and stores of value, such as dollars and euros. This “Libra Reserve”, which will play the role of the central bank, will be managed by the Libra Association. “This approach is similar to how other currencies have been introduced in the past,” the Libra Association statement said. In order to inspire confidence and be adopted for a new currency, the notes issued must be guaranteed to be convertible into physical assets, such as gold. Although Libra is not backed by gold, it is redeemable for a range of low-volatility assets. »

What is Facebook’s exact role in its governance?
Knowing that its confidence was badly damaged by the scandals of 2018, leading Cambridge Analytica, Facebook took precautions to appease. If the initiative comes from Mark Zuckerberg’s company, which intends to maintain control of the currency until its launch in 2020, it will be an independent organization, the Libra Association, that will govern it.

The Geneva-based non-profit organization now brings together 28 members, including companies such as Mastercard, Visa, PayPal, Uber, Booking, eBay, Vodafone and Iliad (whose boss Xavier Niel is a World shareholder). Facebook is one of them One, it created for the occasion through its subsidiary Calibra. And promised she would only be a member like any other member of the Libra Association, with no more powers. By the time Libra launches, the group hopes to gather around 100 members, including research centers and NGOs.

Still collecting new data for Facebook?
The statement read that Calibra was created to “ensure that social and financial data are kept separate.” Calibra “will not share account information or financial information with Facebook or any third party without the user’s consent,” the company said. “However, except in certain limited circumstances, references to Facebook are made to ensure the safety of users, to comply with laws, or to provide basic functionality to Calibra users.»

But the company promises that Calibra’s data won’t be used to better target ads on Facebook and the group’s other apps — the foundation of Facebook’s business model today.

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