Cryptocurrencies are the future of payments and investments. In the near future notes and coins will hold very little significance. Cryptocurrencies are paving their way towards the future of payment methods. Although today we might not see a lot of cryptocurrency in use but soon with the development, cryptocurrency will replace the traditional monetary system. Here we tell you about Facebook’s new Cryptocurrency Libra.
Whenever we talk about cryptocurrency we might think of Bitcoin, Litecoin, Etherium, Ripple, etc. In the modern era, cryptocurrencies are of great value. Even though Cryptocurrencies have a great future they are used very less today. The main reason being the inability to exchange easily. But with Facebook developing its own cryptocurrency it might become a little bit more used currency.
The heart of the matter
Facebook has recently unveiled its plan to create a new digital currency and financial system to transform the way money moves around the world, and not just like PayTm or any other apps who do that within their own apps.
Facebook is all set to launch its new cryptocurrency called Libra in the first half of next year. The main goal of Libra would be to create services for the developers to send money all around the world for free. It would be as easy as sending a picture from one place to another.
What is Libra
Libra will actually be a cryptocurrency but it will have major differences with other cryptocurrencies. It will be run by a nonprofit, the Libra Association, based in Geneva, Switzerland. Its goal is to be broadly accessible, stable and secure. On a technical level, Libra is broadly similar to bitcoin and Ethereum.
It has the same anonymity properties, and the same support for smart contracts and independent apps. In theory, it’s everything good about cryptocurrency, only bigger and faster. While many of the technical aspects are similar to bitcoin, Libra breaks from the model in important ways. The currency runs on a permission blockchain, which means that only companies in the Libra Association can mine it.
Libra will let you buy things or send money to people with nearly zero fees. You can pseudonymously buy or cash out your Libra online or at local exchange points like grocery stores, and spend it using interoperable third-party wallet apps or Facebook’s own Calibra wallet that will be built into WhatsApp, Messenger and its own app. Consumers will not interact with the Libra Association, but will only interact with Libra through a digital wallet or an operator. For people who don’t have the ability to digitally purchase Libra with a credit card or digitally linked account, Marcus says he expects companies in emerging markets to create locations where people can exchange Libra for cash.
Is it safe and secure?
Looking at the recent records of Facebook you might think that Libra will not be safe as it might indulge in the leaking of account details. But Facebook will not interfere in the Libra and Libra and the social networking site will be totally different.
The financial information from your digital wallet will not be used for ad targeting on Facebook’s platforms because the two divisions will be kept totally separate, the company said.
Even though Libra is totally a different body and it plays at decentralization, it’s still basically a Facebook project. Facebook employees designed the blockchain and recruited the partners that will manage it. Libra wallets will be embedded in Facebook apps like Messenger and WhatsApp, which means Facebook products will be the primary way people experience it.
The main thing here is that using Libra means trusting Facebook, which is a hard sell in 2019. And where cryptocurrency initially meant decentralizing power, Libra means further entrenching one of the most powerful companies on Earth. In the most basic terms, using Libra means trusting Facebook. If the project succeeds, it could mean the end of the decentralized era of cryptocurrency.
Libra is not made by Facebook alone, Facebook is joined by 27 other companies and organizations that are founding members. The goal is to have a minimum of 100 companies and organizations on board for its launch next year.
The companies present in the Libra Association are Visa, Stripe, and PayPal, which will be able to help merchants accept Libra. Along with them, there are also some Tech companies, including eBay, Lyft, Uber, Spotify, and Latin American payments platform Mercado Pago, which could drive adoption of acceptance of the currency. Iliad and Vodafone are also involved.
The companies involved in Venture capital investment have experience with digital payments. They include Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital, and Union Square Ventures. And four blockchain companies are involved: Anchorage, Bison Trails, Coinbase and Xapo Holdings.
The above list of founding members invested a minimum of $10 million to fund the operating costs of the nonprofit association.
How successful it will be
Cryptocurrency might not always be that of a profiting business. In cryptocurrencies, Facebook saw both a threat and an opportunity. They held the promise of disrupting how things are bought and sold by eliminating transaction fees common with credit cards. Bitcoin and other cryptocurrencies are not very successful. Facebook doesn’t know if the people will use its Libra or not.
They are investing billions in marketing as Libra is one of a kind. Meanwhile, the 1.7 billion people who lack a bank account might choose whoever offers them a financial services alternative as their online identity provider too. Facebook wants to attract such consumers.
Well, better engineering of cryptocurrencies is very necessary to be successful as a medium of exchange. Due to this, Bitcoin and Etherium failed and their unanchored price was susceptible to huge and unpredictable swings, which made it tough for merchants to accept as payment. Cryptocurrencies lose out their value most of the time because there are not many places where it could be exchanged.
To make it a huge success in exchanging it should be as easy as doing physical money transactions. But with Facebook’s relationship with 7 million advertisers and 90 million small businesses and the experience they have, it might not be a problem.
Facebook wants to make Libra the up-gradation of PayPal. They will make Libra simple to set up, It will be very handy when it comes to payment, more efficient with fewer fees, access to the unbanked, more flexible and more long-lasting through decentralization.
Libra as a cryptocurrency will change the existing methods of payment. With all the forecast and the experience involved Libra will surely be a success. Now you know all about Libra so you just need to wait for its launch. You can cash in Libra wherever you want as it will be accepted by any payment wallets. The most important and advantageous thing for Libra would be that it could be used by everyone for transactions, unlike the traditional credit cards. Moreover Libra would remain very stable, unlike the other cryptocurrencies.