What’s the Buzz…? Facebook Libra

What’s the Buzz…? Facebook Libra

by Mark Selby, 14 August 2019

Politicians and the global financial sector are focusing increased attention on Facebook’s proposed blockchain-based cryptocurrency, Libra, which the social media giant began publicising just weeks ago.

Entering the ever-expanding crypto universe during a period of intensifying legislative scrutiny, conscientious investors might well have pause for thought when it comes to assessing the sustainability of the social network’s new cryptocurrency.

So what exactly is Libra? What does Facebook aim to do with it; what makes it unique; when might it become available and what might follow it?

Tall promises

In many ways, Facebook is taking aim at what it sees as shortcomings in the local and international banking systems and the estimated 30% of the global population that lives without a bank account.

According to the Libra website, the cryptocurrency aims to “reinvent” money by transforming it from a collection of global currencies into a “global, stable and secure” currency that works for and enables everyone to join the worldwide economy.

Facebook hopes to attract the 1.7 billion ‘unbanked’ citizens around the world, most of whom are female.

Instead of customers waiting days to transfer money around the globe, Libra would flow between users in seconds and all transactions would be logged in a secure distributed ledger – thanks to blockchain technology. 

Libra granting access to those services more quickly and cheaply could help free up $3.7 trillion in GDP across the developing world by 2025, Facebook says.

Uniqueness

What differentiates Libra from a bitcoin network or other crypto exchanges? The primary difference is that Facebook proposes to back Libra with a portfolio of government bonds from established central banks and other examples of what the company describes as “low volatility” financial assets from around the world.

These assets would be held within a ‘Libra Reserve’ overseen by a real-world, central authority based in Geneva made up of credit card leaders like Mastercard and Visa, mobile tech businesses like Uber and Lyft, and cryptocurrency platforms like Anchorage and Coinbase. 

Notably absent from the table are two big players: Google and Apple.

The idea would be for users to buy a given quantity of Libra with existing currency – whether British pounds or Papua New Guinean kina – and then operate financially through a Libra-based account. 

In effect, users would convert their holdings in a single currency into an electronic amalgam of different financial products from different parts of the world, which in theory, would steady the Libra from volatile inflation and deflation.

Finally, Libra is OpenSource, meaning it can be built upon and adapted, and Facebook hopes for an ecosystem of products to evolve around it.

When and where?

While Facebook has yet to set a concrete launch date, the year 2020 has been bandied about – partly due to serious questions by US lawmakers over the company’s privacy practices. What is clear is that Facebook has enlisted powerful allies and seems determined to push ahead with Libra.

However, competition in the space is heating up. Similar apps already exist, such as WeChat in China. Separately, Twitter founder Jack Dorsey is reportedly planning on putting a “crypto team” to work at his payment platform Square.

If Libra survives the ongoing scrutiny, it could bring huge opportunities to users and developers alike in building out new products. Those could eventually manifest themselves in new supply chains, smart contracts and other blockchain solutions.

Are you the next Satoshi Nakamoto or a blockchain-based startup looking for a coworking space where your business can reach the next level? Click here to learn more.

No Comments


Leave a Reply

Your email address will not be published Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

*

This site uses Akismet to reduce spam. Learn how your comment data is processed.