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After months of speculation, Facebook has finally announced its own cryptocurrency. Called Libra, the cryptocurrency will allow users to buy and sell goods with nearly zero fees. Facebook will allow users to buy and sell the currency online or at offline exchange points like stores. The company released its white paper explaining Libra and its testnet for working out the issues before a public launch in the first half of 2020.
To implement the cryptocurrency globally, Facebook has partnered with 27 organizations around the world to create a non-profit organization called Libra Association. All the organizations including Facebook will get a single vote to ensure there’s no monopoly and everyone has equal control. Facebook is using its own Move language to create the cryptocurrency which will be based on Blockchain.
Facebook is also launching a subsidiary called Calibra which will handle the operations related to Libra. The subsidiary will also be integrated into Facebook apps in the future so users can send and receive money using WhatsApp, Instagram and Messenger. Mark Zuckerberg has also ensured that the information shared by users on Calibra will be kept separate from the information on Facebook to ensure privacy. Just like major banks and credit card companies, Facebook will also offer fraud protection to ensure your money is safe in case your account is hacked.
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.
Privacy and safety will be built into every step. For example, Calibra will have a dedicated team of experts in risk management focused on preventing people from using Calibra for fraudulent purposes. We’ll provide fraud protection so if you lose your Libra coins, we’ll offer refunds. We also believe it’s important for people to have choices so you’ll have the options to use many other third-party wallets on the Libra network.
– Mark Zuckerberg
We don’t know much about the working of Libra but like every other cryptocurrency, users will be able to buy it under their name and use it for transactions pseudonymously with low to none transaction costs and cash out if whenever they want.
Facebook is hoping to reach over 100 members before the currency is released and is open to everyone including Google. Facebook is also planning to peg Libra at a fixed rate to fiat currency which means that Libra will be stable for the most part and won’t see major fluctuations in values like Bitcoin or Ethereum. To achieve this, the Libra Association will maintain a basket of bank deposits and short-term government securities for currencies like Dollar, Pound and Yen. This way they can change the composition to offset any sudden fluctuations in one major currency so that Libra remains constant. Libra will be denoted by the unicode character “?”.
Facebook has released a detailed white paper of over 100 pages explaining the technology behind Libra. At this moment, one of the biggest issue for cryptocurrencies is the major fluctuations mainly due to pump and dump schemes. These schemes are illegal in almost all the countries but the law applies to just the stock and derivatives market and not to cryptocurrencies. If Facebook could pull this off perfectly, Libra can be a true decentralized global cryptocurrency that can be adopted by companies and countries around the world.