Social media mogul Facebook, earlier this week announced the much-awaited cryptocurrency Libra, which is slated to make the commercial debut in the first half of 2020.
Considering the volatility of the cryptocurrency, there is a lot of apprehension among prospective users. DH will try to demystify the new digital currency Libra in simple terms.
Key aspects of Facebook's cryptocurrency Libra:
1) Libra is a unit of cryptocurrency and is claimed to be more stable than the Bitcoins or Ethereum. Its value will not swing as wildly as the latter two, as Facebook claims that each Libra coin generated will be matched by real-world assets such as bank deposits, government securities in currencies including Dollar, Sterling Pound, Euro and others from global reputable and stable financial institutions.
2) The new cryptocurrency will be governed by an independent, not-for-profit membership organization dubbed as the Libra Association, headquartered in Geneva, Switzerland. In addition to Facebook, top companies such as Visa, PayPal, Mastercard, Vodafone, eBay, Booking Holdings, Farfetch, Lyft, MercadoPago, Spotify AB, Uber, Blockchain companies- Anchorage, Bison Trails, Coinbase, Inc., Xapo Holdings Limited, Venture Capitals firms--Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital, Union Square Ventures and others form the new association. Facebook claims, it will try to bring in member count to 100 before the official launch of the Libra in 2020.
3) New members can join the Libra Association with a minimum investment of $10 million and they receive Libra Investment Tokens. They will have equal governing rights on bringing changes and improving the system.
4) Node operators, who bring new people to use Libra and actively transact for a minimum of one year, will be rewarded with a commission.
5) Before the induction, prospective Libra users have to sign up for Know Your Customer and undergo anti-fraud and money laundering process and provide government-issued IDs and other verification information
6) One of the major benefits of Libra is that there will be small fees if not none in select markets, for inter-country money transfer. Facebook says that the company will make use of interest accrued from reserve assets to keep the transaction fees low.
7) The virtual money transfer speed will 1000 transactions per second, much faster than other cryptocurrencies such as Bitcoin or Ethereum (and others), which by the way can handle a meager 7-to-60 per second.
8) Libra transaction will be carried on most secured channels and will be very hard for any hackers to steal cryptocurrency. If it does get breached and affects one-third of the validator nodes, the Libra Association will suspend all the transactions and make sure to resolve the issue and only then restart. Facebook and Libra Association is also planning to collaborate with HackerOne to set-up a bug bounty platform for freelance developers to identify glitches in the blockchain system.
9) Initially, Libra can be used for the transaction on Facebook's e-wallet Calibra. It is said to be as easy as sending texts on messenger apps. Facebook says Calibra will be integrated with both WhatsApp and Facebook Messenger to make it convenient for friends and family to transfer money. Over time, PayPal, PayU and other third-party e-wallet companies are expected to support Libra cryptocurrency
In the recent past, Facebook has been panned by governments and tech critics alike, for the company's failure to have a proper security system to protect user privacy on its social media platforms. Facebook will have its work cut out to convince prospective users to embrace Libra cryptocurrency. Also, some countries including India have banned virtual currency transactions over security risks and illegal money laundering cases.
The first challenge faced by Facebook will be in its home country. It has been asked to attend the US Senate Banking Committee hearing on July 16. The company's blockchain division head, David Marcus is expected to testify in front of the panel. Stay tuned more updates.