Ever since Facebook announced that it will be releasing its own cryptocurrency, so many interested parties have tried to gain a glimpse of what this is. What is Facebook Libra Cryptocurrency all about? Read on to find out.
All about Facebook Libra
Libra is a form of cryptocurrency created by Facebook. The multi-billion dollar company says that this crypto will be used to reduce the cost and increase the speed of sending money online. With Libra, Facebook hopes to enhance access to financial services, targeting mostly people who do not have bank accounts or are limited regarding banking options.
In the simplest terms, a blockchain is basically some kind of public ledger on which the history of transactions is recorded. Banks normally have such ledgers, which are kept private, meaning only a single entity manages them. In the case of blockchain, the management is done by a cluster of computers that are used to approve or disapprove a transaction.
The blockchain network does not have a central authority, which explains why it is so disruptive to the industry. Whereas the already established governing authorities (central banks or the Federal Reserve) would like to retain the status quo, users are eager to get off the confines of such oversight on their money.
They want to use it as they please, without having to go through some kind of third-party system which charges them excessive rates.
Facebook explains that its blockchain network will be the fastest compared to any other cryptocurrency, making it virtually useful for everyday operations like buying stuff online. Speed is of great essence when it comes to online transactions.
No one wants to wait for such a long time to pay for something with their hard-earned money. If Facebook manages to pull off this, it will have earned its place in the hearts of many online entrepreneurs and buyers.
The fact that Libra Network is set to be open source means that developers will be able to access it and create their own digital wallets. The success of any initiative needs a deeper engagement of the public and the fact that FB Libra blockchain has chosen to be open source means chances of success are huge.
Facebook plans to eventually move the Libra Network to the public blockchain. However, as things currently stand, no mechanisms have been provided as to how that will happen.
Facebook may have created Libra but the company will not be directly involved in its management. Rather, a nonprofit organization referred to as Libra Association has been put in place to oversee the launch and governance of this cryptocurrency.
This is a consortium of global companies and nonprofits whose headquarters are in Geneva, Switzerland. The 28 founding members operate in a wide range of areas including technology, payments, venture capital, telecommunications, and blockchain in addition to nonprofit.
Some of the notable Libra Association members are Lyft, PayPal, Coinbase, Mercy Corps, among others. Facebook hopes to increase the number of members to at least 100 by the time Libra is launched.
The Libra Association is tasked with two major roles: (1) operating the servers that run the Libra Network, and (2) managing reserve to back Libra so that its stability is guaranteed.
Why is Facebook Libra Exciting so Many People?
So many people, from politicians to businesspersons and regular users have developed such a strong interest in Facebook Libra. It is understandable why that is so, after all, Facebook is a massive company whose impact can be felt all over the world.
Come to think of it, there is literally nothing the Zuckerberg-owned company can do without attracting attention from all over the globe.
For a long time, cryptocurrencies have tried to make a mark in the world’s financial transactions. The most impactful aim has been to get rid of the central bank. This is something that has not been easy to do.
But with Facebook joining the equation, what are the odds that the long-term dream won’t be achieved any time soon? Remember that Facebook has access to billions of data, thanks to the massive usage that the site records.
This is the kind of access that gives an upper hand in eventually becoming the successful initiator of cryptocurrency use.
Theoretically speaking, getting rid of the central banks brings some kind of democracy to currencies. Businesses would be able to operate without the fear that the government could interfere with their possibility of getting paid by clients. Similarly, sending money becomes untraceable, something that most people have always wanted.
Facebook’s ambitions to become even more powerful are unimaginable. As things currently stand, the social media platform has already impacted every corner of the world. With this cryptocurrency, it will impact even more lives.
By the time it eventually launches, a bigger number of business owners and buyers will be encouraged to perform most of their transactions through Libra, keeping them engaged via the FB ecosystem.
How Will Businesses Benefit from Libra?
Libra provides the perfect opportunity for all kinds and sizes of businesses to increase their client base. Facebook aims at bringing customers closer to businesses without being hindered by geographical barriers. This has to be done in an easier, secure and stable manner.
When a business accepts a means of payment that is used globally, it sets itself on the right path to reach a wider audience. Enhancing the speed at which transactions are done by improving the checkout process is also a big plus.
Another major thing that Libra brings to the table is stability. With it, gone will be the days when businesses often encountered unexpected declines in the value of the money held due to unfavorable currency shifts. This goes a long way in improving the state of e-commerce via its different applications – Instagram, WhatsApp, Messenger, Facebook, etc.
Regulatory Concerns for Facebook Libra
Even as we all become hyped by Facebook’s decision to enter the world of cryptocurrencies, authorities are approaching it with a pinch of salt. Recently, Bitcoin and other unregulated cryptos have been on the wrong side of the Senate as they face stiff scrutiny. This is mainly triggered by the unease associated with the Libra project.
In a U.S. Senate bank committee seating, the Libra project was highly criticized as the lawmakers questioned whether or not it could disrupt the global financial system.
Facebook has maintained a consistent commitment to work with the regulators prior to launching Libra. This willingness to cooperate is meant to assuage lawmakers’ fears that once the platform’s 2.38 billion users adopt the crypto, there will be global financial instability.
Furthermore, the social media giant would have access to a vast amount of personal financial information. There are worries as to how such data would be best managed and kept safe.
It is true that Facebook has had a fair share of scandals, hence these are legitimate concerns. However, it would be unfair to acknowledge that the platform has taken considerable steps in making things right.
Even as the elected officials struggle to make sense of Libra, developers are already at work as they learn how it works. Several are already building actual projects like crypto-wallets andante-money-laundering programs. Once rolled out, Libra is sure to become the next big thing.
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