Facebook’s new crypto, Libra could be what gives the social media giant a new revenue stream that is historic and revolutionary as it is a possible rival of the leading crypto, Bitcoin. The details of the new Libra crypto are finally out, and Bitcoin is struggling to keep up since the announcement. What is so special about this Libra Crypto, and what will it do for Mark Zuckerberg’s masterpiece, Facebook?
Libra crypto details
The goal of the new Facebook crypto, Libra, is to provide a way of purchasing goods and transferring money globally with low to no fees. Although Libra crypto and its blockchain will launch next year; the testnet is being released in the next few weeks; and the developers can analyse it, build on it and give feedback. Some features of the Libra Crypto include;
The Libra association
The libra Association is a non-profit association which is in Geneva, Switzerland, led by Facebook and comprises of Major companies such as Paypal, Visa, Uber, Mastercard and Vodafone. These companies are like Partners of Facebook in this ground-breaking cryptocurrency project, along with other non-profits to govern the network. Members will pay $10 million to manage a node on the network. (Have a quick recap on Mastercard’s involvement in crypto in one of our previous articles.)
The Libra Association describes its goal as ;
“A stable currency built on a secure and stable open-source blockchain, backed by a reserve of real assets, and governed by an independent association.”
The Libra crypto is going to be of ‘low volatility’ and is powered by the Libra Blockchain. The Libra Blockchain is the association’s native smart contract platform that will focus on security, scalability as well as reliability and emphasises on ‘banking the unbanked’.
Therefore, the Reserves, backing Libra will comprise of a basket of “low-volatility” assets such as government securities and Bank deposits in currencies from more stable central banks which include USD, EUR, GBP and JPY.
“Libra is not pegged to a single currency and does not have a fixed value in any real-world currency.”
Security token offerings
In an attempt to cover their operating costs and fund incentive programs Libra crypto will issue security tokens by the name Libra Investment Token (LIT). These securities will only be available to accredited investors, and these investors will receive interest from the Libra reserves as rewards.
Facebook has set up a wallet called Calibra that will stand as a separate company; it is designed to ensure the separation of user data; that is, separating social and financial data. The wallet is registered with FinCEN ( Financial Crimes Enforcement Network) as an MSB since February 2019.
Calibra will allow users to transfer their funds and store their tokens locally; However, it will not combine your data with Instagram and Facebook or any of its other apps unless you permit it to do so. Therefore, only Calibra will know and keep a record of all your transactions; this is a very convenient and user-friendly option that Facebook has created because even if you lose your phone or your password, you can still access your money. Furthermore, this way, Calibra can easily intervene if there are any cases of fraud or anything of that sort.
Another positive aspect of Calibra is that it will run inside Messenger and WhatsApp, which means over a billion people can have seamless access. Calibra will launch sometime in 2020 if and when Libra crypto finalises some protocols.
Good news! You do not have to be on Facebook to use Libra crypto!
According to the Libra association, anyone can use the Libra crypto. As an open-source payment network, third parties including; Indian fintech PayTM, Google, start-ups and non-profits can develop their own marketplaces, apps and wallets around Libra crypto.
What’s Bitcoin to Libra?
Does Libra crypto have the potential to be better than Bitcoin? Maybe, maybe not! What we know for sure is that they have differences that are more in favour of Libra than Bitcoin; these include the fact that Libra’s price is backed by a reserve fund; whereas Bitcoins value just drifts.
Another difference is that BTC’s record is on a public Blockchain, and every Tom, Dick and Harry can Build on it. Whereas, with Libra, to build on its blockchain’s features, one has to have authorisation from; Facebook and its Partners by whom it is administered.
Bitcoin has been indulging in year-highs with a recent jump of over $9000; analysts have accredited this spike to Facebook’s crypto launch news. Take a look at how Bitcoin has grown so far.
The success of Libra crypto would not only be a huge leap for the cryptocurrency world but the world Period! The financial world will change immensely; this would be the most significant product Facebook has released yet. The Libra project would be a fascinating alternative to the way banking is done now all over the world; especially developing countries. I don’t know about you, but I am excited to see what is to come.