Facebook announced its plans to launch Libra, a digital currency, in 2020. Once available for use, the cryptocurrency will be put away in a digital wallet called Calibra, which will be accessible as a standalone app just as inside Facebook Messenger and WhatsApp. Facebook has made a backup of a similar name to regulate the administrations.
How will it work?
Once launched, clients will almost certainly purchase Libra and add it to their digital wallet. Like the Chinese social application WeChat, which has incorporated installments, Libra will be incorporated with Facebook Messenger and WhatsApp, enabling clients to send and receive money via messages.
People will almost certainly send money at “low to no cost”, Facebook said in a statement, suggesting that a small commission may be taken from transactions.
In the end, the firm imagines Libra will likewise be utilized for disconnected installments as well, for example, paying bills, buying coffee, or paying for public transport.
Who is included?
The cash has been sponsored by Visa and Mastercard, just as tech firms including Uber, Spotify and eBay, implying that they are probably going to acknowledge Libra installments in future.
Libra will be based alone blockchain, a decentralized database that records the historical backdrop of exchanges after some time.
The product running it will be open source, implying that others can fabricate new applications that will utilize the currency and run them on any kind of device.
What’s the point?
Libra represents a new business model for Facebook. The ease of using Libra to make payments within Facebook-owned apps may result in higher engagement, says Catherine Mulligan of Imperial College London. “They can retain you on their platform,” she says. “They don’t lose that end user eyeball.”
Facebook has also said that the currency aims to provide financial services to people without bank accounts – an estimated 1.7 billion adults worldwide, two-thirds of whom own a mobile phone.
“There’s this idea that using cryptocurrencies allows you to serve the unbanked”, says Mulligan.
Can we trust it?
“I would be quite concerned about Facebook becoming a bank for people who are in vulnerable situations,” says Mulligan, citing privacy concerns regarding the firm’s poor track record of handling user data.
Facebook has said that account details will not be shared with Facebook or third parties for advertising purposes, except for cases of data sharing “to keep people safe, comply with the law, and provide basic functionality to the people who use Calibra.”
How is it different from other cryptocurrencies?
Cryptographic forms of money are decentralized types of digital cash, implying that dissimilar to traditional currency, they are not constrained by single substances, for example, a national bank. In any case, it isn’t yet clear what level of control establishing associations of Libra will have over the cryptocurrency.
The best-known digital money, Bitcoin, is run along these lines yet its worth has been unstable as of late.
Not at all like Bitcoin, Libra will be supported by a hold of genuine resources, implying that the estimation of the cash is connected to something with natural worth as opposed to driven by interest or shortage.
The Libra hold will incorporate bank stores and government securities in a few global monetary forms. The hold will be controlled by a non-benefit related headquartered in Geneva, Switzerland.
Libra is not Facebook’s first venture into virtual currencies. In 2009, it launched the short-lived Facebook Credits, which let users buy items in Facebook-hosted games and apps.