Last Tuesday Facebook has come up with another big announcement which is its new currency “Libra”. You probably have heard the name already or seen it on your newsfeeds by now. But what is “Libra” currency? How we can benefit from it? Is it for everyone and safe to use or not?
The reason for this blog is to highlight some of these answers and pop up more questions about the new hit.
Now enough with the small talk and let’s get into the main topic.
Libra is the new digital currency invented by Facebook, it is designed in a way to be secure for financial transactions and everyone will be able to use it maybe by the beginning of 2020.
Since it is a digital currency, it won’t have any physical shape like national currencies meaning you can’t carry it in your pocket, but definitely, you will be able to carry it on your phone instead. “Libra” will be run by a computer network instead of banks or institutions and the actual standards for the currency will be managed by a nonprofit association in Switzerland called the Libra Association.
“Libra” is built on a blockchain which we have covered before in our blog, we recommend you to have a quick look at it for a refresh. The idea of electronic currency isn’t new at all, actually, it has been there for a long time and we mean long before 2009 when the “Bitcoin” came to life.
Some would say that it is similar to “Bitcoin”, but what makes “Libra” different than “Bitcoin” is that Facebook has developed it based on real assists which make it a stable coin and less volatility. But no one knows how much of equivalent asset “Libra” will be!
“Libra” association includes 28 powerful companies like for example Paypal, Mastercard, Visa, Uber, Vodafone, Thrive Capital and Spotify. All the companies will contribute and run a part of the currency network. Facebook is hoping this will grow to 100 companies by the time of launching the new currency in the first half of 2020. The founding members of the “Libra” association will earn invest in the money users cash that is held in reverse to keep the value of “Libra” stable.
What a minute, won’t that create a conflict of interest?! We think it will. In fact, we think that this will be one of the challenges that the new currency might face.
Now that we have covered what is “Libra”, how actually the currency will run?
“Libra” currency will be run by Calibra which is a subsidiary company of Facebook and it will be the one who handles all the crypto dealings & protects users’ privacy. It will offer its digital wallet called “Calibra Wallet” which can be connected to other applications such as Facebook Messenger and WhatsApp aside from its own standalone application.
Of course to be able to use the app and start with your payments your name and identity will have to be there, but you won’t have to add them each time you make any payment; however, it will be public. Regardless of the fact that Calibra is a subsidiary of Facebook, Calibra will keep all your financial data away from Facebook.
Each time you cash a dollar, for example, the money will go to a big bank called the Libra reserve which creates and send your Libra tokens. The reserve isn’t just made of US dollar currency, it is made of a collection of the most stable currencies in the world, to remain the value of the “Libra” even with the changes that any of these currencies may face.
A question might pop up to your mind now, will I need a Facebook account to be able to use “Calibra Wallet”? Calibra has stated that no you won’t, the wallet is there for everyone to use
How we can benefit from “Libra”?
With the new currency, they say your life will be easier. You will be able to buy things or send money to people with nearly no benefits at all since you won’t have to pay for any bank or transaction fees any more adding to that the transfer will happen in no time not in three to four working days. And in the future, they are hoping that you can cash out your “Libra” currency into actual banknotes whether in your bank account or handed to you from the nearest local store.
It is not just intended for Facebook, but you can use it as well offline meaning that you can buy your favorite food or coffee with your “Libra” balance. You can even get offers, discounts, and rewards when using “Libra” currency.
Is “Libra” secure or not?
Now, do you remember the big buzz that happened around Facebook privacy violations a while back? Sure this has must get you wondering about your data privacy since “Libra” is developed by Facebook after all, right? We know we did, but if you are worried about your data privacy like us, Calibra has announced that it won’t share any customers’ data with Facebook without users’ agreements which means that the application won’t use your financial data to target you with specific ads on your newsfeed or sell your info to marketers.
What about the challenges?
Just like any new thing, the new currency has some challenges to pass. We all know that governments always try to control the money supply for economic and political reasons and we think this is better for everyone since such openness isn’t always good, now if “Libra” started to become more real currency than just a digital one, will it still be run by Facebook or government will take over?
Another challenge “Libra” might face is organizing the payments; payments and transfers require a lot of security regulations, are Facebook and Calibra able to handle such regulations. What will happen if some of the users were able to crack the system and steal the users’ balance?
Also what if users decided that they don’t want to use “Libra” anymore, can they sell it? If yes, then to whom they can sell it. If not, then what can they do it?! And since Facebook didn’t announce the actual equivalent asset of “Libra” how will users be able to sell it, in fact, how will they be sure that what they are getting for the “Libra” exchange is actually what it is really cost?!
Now that you have a good idea about “Libra” the new currency, do you think it will really work and succeed or it is just another one of those Facebook announcements that we heard about them once and didn’t hear about them again – We don’t actually remember them to give an example, but we are sure there were a few!
So tell us what do you think about this big change? Will you be comfortable using the new currency or not?! Share with us your thoughts.