Crypto money Facebook: LIBRA will change the way you spend money
Facebook has unveiled plans for a global crypto-money "Libra" which the social networking giant hopes will offer an alternative to cash, credit cards, and bank transfers.
The Libra currency, scheduled for launch in the first half of next year, has been supported by 27 other companies and organizations, including Uber, Spotify, Mastercard, eBay, and Vodafone.
It is by far the most widely supported and resourced effort to integrate cryptocurrency and blockchain technology into the financial marketplace since its invention more than a decade ago and represents a major step forward for Facebook's financial services,
so how will that change the way you spend money?
It is by far the most widely supported and resourced effort to integrate cryptocurrency and blockchain technology into the financial marketplace since its invention more than a decade ago and represents a major step forward for Facebook's financial services,
so how will that change the way you spend money?
Instant and cheap money transfers
Libra - named after the Roman unit of measurement for coins - differs from other major cryptocurrencies such as Bitcoin in that it is backed by a group of currencies, notably the pound and the dollar, which makes it much less volatile.
To date, digital currencies such as Bitcoin have attracted a lot of interest but have failed to take off as an online payment option, partly because of their highly volatile costs.
The association behind the currency said it would involve instant and inexpensive money transfers, even between continents, and wanted it to be widely used for purchases and payments.
To date, digital currencies such as Bitcoin have attracted a lot of interest but have failed to take off as an online payment option, partly because of their highly volatile costs.
The association behind the currency said it would involve instant and inexpensive money transfers, even between continents, and wanted it to be widely used for purchases and payments.
A "portfolio" to buy and sell applications
Facebook will launch a "wallet" application for buying and selling with Libra, and allow people to use it to make payments via WhatsApp and Facebook Messenger. He said he hopes to expand it by allowing people to borrow money, buy goods and pay bills using Libra.
But the social network insisted that it would not use any financial data for advertising purposes and that the currency would be independent of the company.
Instead, Libra is managed by a consortium of major funders, the Libra Association, which will exercise equal control over the network.
Association Libra, the Geneva-based organization that will operate the crypto-currency, hopes that it will be used worldwide to make payments over the Internet, promising that it will be faster, cheaper and more secure than traditional methods of payment.
"The advent of the Internet and mobile broadband has enabled billions of people around the world to access global knowledge and information, high-fidelity communication and a wide range of cheaper and more convenient services," said the Libra Association in a paper announcing the introduction of crypto-money.
Despite this progress, large sections of the world's population are still being left behind: 1.7 billion adults worldwide remain outside the financial system without access to a traditional bank, even though one billion of them have a mobile phone.
Cryptocurrencies operate on a blockchain, a record of transactions designed to resist hackers. Libra's blockchain design means that each of its 28 members will have equal control over the technology.
The association said it hopes to have more than 100 members by the time the currency comes out next year.
Members of the association have each invested $10 million in the establishment of Libra, although it is not known to what extent other companies are considering funding it.
Vodafone said it could use the technology to improve its mobile money services, such as M-Pesa, which is popular in Africa. Other funders, such as Uber, Spotify, and PayPal, have said they have no immediate plans to implement the currency on their services.
Governments and security services have expressed concerns about cryptocurrency and its potential use for criminal behavior. The Libra Association said that if the transactions did not reveal real-world identities, the exchanges used to buy and sell Libra would work with law enforcement agencies.
But the social network insisted that it would not use any financial data for advertising purposes and that the currency would be independent of the company.
Instead, Libra is managed by a consortium of major funders, the Libra Association, which will exercise equal control over the network.
Association Libra, the Geneva-based organization that will operate the crypto-currency, hopes that it will be used worldwide to make payments over the Internet, promising that it will be faster, cheaper and more secure than traditional methods of payment.
"The advent of the Internet and mobile broadband has enabled billions of people around the world to access global knowledge and information, high-fidelity communication and a wide range of cheaper and more convenient services," said the Libra Association in a paper announcing the introduction of crypto-money.
Despite this progress, large sections of the world's population are still being left behind: 1.7 billion adults worldwide remain outside the financial system without access to a traditional bank, even though one billion of them have a mobile phone.
Cryptocurrencies operate on a blockchain, a record of transactions designed to resist hackers. Libra's blockchain design means that each of its 28 members will have equal control over the technology.
The association said it hopes to have more than 100 members by the time the currency comes out next year.
Members of the association have each invested $10 million in the establishment of Libra, although it is not known to what extent other companies are considering funding it.
Vodafone said it could use the technology to improve its mobile money services, such as M-Pesa, which is popular in Africa. Other funders, such as Uber, Spotify, and PayPal, have said they have no immediate plans to implement the currency on their services.
Governments and security services have expressed concerns about cryptocurrency and its potential use for criminal behavior. The Libra Association said that if the transactions did not reveal real-world identities, the exchanges used to buy and sell Libra would work with law enforcement agencies.
The Facebook Currency
Facebook was quick to insist that Libra was not owned or controlled by Facebook, but a group effort between members of the association. The design of the technology behind the crypto-money means that it has only one "vote" among the organization's 28 existing members when it comes to changing the way it operates, for example.
However, the project was driven by the social network, and it is its strongest supporter. Last year, Facebook set up a special blockchain task force led by David Marcus, former head of the Messenger application and former head of PayPal. Facebook's developers also wrote much of the code behind the currency.
When Libra launches next year, Facebook is announcing the launch of its own digital wallet service, called Libra, which will allow users to buy and sell Libra and return it, as well as spend it in places where it is accepted. The company may also encourage advertisers to adopt the currency by offering discounts if they pay in Libra.
"Libra has the potential to provide billions of people around the world with access to a more inclusive and open financial ecosystem," said Marcus.
Libra's accounts will be separated from Facebook and the company said it will not share data with each other except in certain circumstances, such as at the request of police.
However, the project was driven by the social network, and it is its strongest supporter. Last year, Facebook set up a special blockchain task force led by David Marcus, former head of the Messenger application and former head of PayPal. Facebook's developers also wrote much of the code behind the currency.
When Libra launches next year, Facebook is announcing the launch of its own digital wallet service, called Libra, which will allow users to buy and sell Libra and return it, as well as spend it in places where it is accepted. The company may also encourage advertisers to adopt the currency by offering discounts if they pay in Libra.
"Libra has the potential to provide billions of people around the world with access to a more inclusive and open financial ecosystem," said Marcus.
Libra's accounts will be separated from Facebook and the company said it will not share data with each other except in certain circumstances, such as at the request of police.
How it's going to work
Although Libra is a crypto-currency, it will be very different from Bitcoin, the best known and most valuable digital coin.
While the value of Bitcoin has fluctuated enormously - from $1,000 in early 2017 to nearly $20,000 and is currently trading at around $9,300 - Libra will be backed by a pool of reliable central bank assets, such as the pound, dollar, and yen.
This means that, although its value against the pound sterling may change slightly, the value of the pound sterling against its currencies is not expected to be subject to sharp price movements.
The foreign exchange reserve will be invested in low-risk assets such as government bonds, the interest on which will help finance the association.
The Libra Association claims that there will be minimal costs involved in sending money, as these are necessary to prevent cyber attacks that flood a network of traffic but are still much cheaper than the costs incurred by retailers to accept a credit card transaction or a foreign exchange fee transaction.
Another major difference with Bitcoin will be the underlying blockchain network on which it operates. All computers can join the Bitcoin network, but only members of the association are responsible for the operation of Libra, each having a "node" on the network.
The association says that they eventually want to move to a more "permissionless" system more similar to Bitcoin that will open it up to others.
While the value of Bitcoin has fluctuated enormously - from $1,000 in early 2017 to nearly $20,000 and is currently trading at around $9,300 - Libra will be backed by a pool of reliable central bank assets, such as the pound, dollar, and yen.
This means that, although its value against the pound sterling may change slightly, the value of the pound sterling against its currencies is not expected to be subject to sharp price movements.
The foreign exchange reserve will be invested in low-risk assets such as government bonds, the interest on which will help finance the association.
The Libra Association claims that there will be minimal costs involved in sending money, as these are necessary to prevent cyber attacks that flood a network of traffic but are still much cheaper than the costs incurred by retailers to accept a credit card transaction or a foreign exchange fee transaction.
Another major difference with Bitcoin will be the underlying blockchain network on which it operates. All computers can join the Bitcoin network, but only members of the association are responsible for the operation of Libra, each having a "node" on the network.
The association says that they eventually want to move to a more "permissionless" system more similar to Bitcoin that will open it up to others.
Association Libra
The motto will be governed and operated by the Geneva-based Libra association, which will include Facebook and 27 other organizations and companies. The association said it hopes to reach 100 members by Libra's launch next year.
Members include payment companies such as Visa, Mastercard and PayPal, applications such as Spotify and Uber, as well as non-profit organizations aiming to improve access to finance, and investors, including Andreessen Horowitz, one of Silicon Valley's most famous venture capital firms.
Most have invested $10 million in the Association for Libra, a pool of money that will be used to purchase the foreign exchange reserves that will support Libra's value.
Many of the companies that have supported it have said they are interested in the potential of the technology, but they have not specified how they plan to use it.
Members include payment companies such as Visa, Mastercard and PayPal, applications such as Spotify and Uber, as well as non-profit organizations aiming to improve access to finance, and investors, including Andreessen Horowitz, one of Silicon Valley's most famous venture capital firms.
Most have invested $10 million in the Association for Libra, a pool of money that will be used to purchase the foreign exchange reserves that will support Libra's value.
Many of the companies that have supported it have said they are interested in the potential of the technology, but they have not specified how they plan to use it.
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