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Facebook Libra, Explained

By Connor Freitas

What is Libra, Facebook’s long-awaited cryptocurrency?

Facebook Libra, Explained

1. What is Facebook Libra?

Libra is Facebook’s long-awaited cryptocurrency. The tech giant wants to make it cheaper and faster to send money around the world for billions of its users.

The Facebook libra white paper says the company’s goal is to create a “simple global currency” that delivers financial inclusion to the 1.7 billion adults who don’t have access to a bank account.

Libra is being built on an open-source blockchain, and its development is being led by a non-profit association in Switzerland. Dozens of major companies are part of this association – including Mastercard, PayPal, Visa, Spotify, Uber and eBay.

2. How do you buy Libra coins?

The Libra coin is currently not available to buy as it is still being developed. When it does launch, new coins will only be created when users purchase them with real money through apps such as Messenger or WhatsApp.

Libra is a type of stablecoin – and this means that its value is going to be pegged to a basket of fiat currencies such as the US dollar. Every time new Libra is created, the user’s money will be held in reserve to protect its value.

3. Where will Facebook Libra be stored?

Facebook has unveiled a digital wallet known as Calibra. The company says this tool will make sending Libra as easy as a text message. Over time, it’s hoped that the cryptocurrency will be used for paying bills, buying a morning coffee, and as a replacement for bus and train passes.

Amid concerns about privacy, Facebook says that Calibra is going to be kept separate from its social network – meaning that a customer’s purchasing habits won’t be used to create targeted advertising.

4. What is the Libra coin release date?

At the moment, that’s unclear – however, Facebook is hoping that Libra will be available in the first half of 2020.

It is possible that Libra’s launch could be delayed because financial regulators around the world have expressed concerns about the project. Central banks and governments are worried that the Facebook cryptocurrency will be used to launder money or fund terrorism – and some even claim that Libra could threaten the world’s financial stability or stop the public from using dollars, pounds and euros.

Politicians in the United States have asked Facebook to stop developing Libra until they can figure out if, and how, the cryptocurrency can be regulated.

5. Does the Facebook coin have downsides?

There are many people who are critical of Libra. Joseph E. Stiglitz, a Nobel Prize-winning economist, has even said that ”only a fool would trust Facebook” with their money. He believes that the cryptocurrency could undo decades of work to clamp down on fraud and create transparency in the financial industry.

Others fear that Libra could make Facebook even more powerful than it already is. Given how the cryptocurrency industry has generally been pushing for decentralization, removing middlemen from the process and stopping one central authority from controlling transactions and activity, some are concerned that Libra could undo all of the hard work that advocates have been trying to achieve.

6. Will Libra be available everywhere?

That’s unlikely. Several countries have taken a hardline stance against cryptocurrencies in general. Calibra recently said it would only operate in countries where it was legal to do so. As a result, this could rule out places like India, where Facebook has more than 270 million users.

Research from the World Bank recently showed that India has the second-largest population of unbanked adults on the planet, and Libra’s absence from this massive market could undermine its ambition to deliver financial inclusion to everyone.

7. What will Facebook Libra mean for Bitcoin?

While some crypto enthusiasts think that Libra is a positive move for the industry – paving the way for mainstream adoption – others worry that Facebook could end up driving demand away from Bitcoin and other coins if it manages to make crypto payments faster, less expensive and simpler.

However, rumors of Bitcoin’s death may be greatly exaggerated. Supporters argue that the world’s original cryptocurrency delivers many advantages that Libra cannot. They claim Bitcoin offers greater levels of privacy, eliminates censorship, and could prove to be a more effective store of value in the years to come because of how it isn’t pegged to other assets.

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