The new cryptocurrency Libra was introduced by Facebook three months ago, on 18 June 2019. It is expected that the launch of the Libra at the global level will take place in the first quarter of 2020, and testing will begin at the end of 2019.
Libra will be integrated into Facebook Messenger and WhatsApp, users will be able to utilize it to make purchases on Instagram and, possibly, in other services that will become partners of the Libra ecosystem.
The most important thing with the Libra is Facebook’s user base, which exceeds 2.5 billion people as of July 2019. The idea is to provide access to this tool to all users of the social network, regardless of their country of residence. The main aim of the project is to allow people to move money around the globe with ease.
As has also been announced, Facebook will not control the currency; the company will only be a member of the Libra Association. The Facebook subsidiary Calibra will operate a wallet service on top of the Libra Network. But despite Facebook owning Calibra, it won’t have access to any financial data.
Calibra will make the digital wallet for users to store and exchange Libra tokens. But this does not mean that people will be restricted to the Calibra wallet; users will be able to transfer money across wallets from different companies which will have full compatibility with one another.
IS IT REALLY WORTH IT?
According to Facebook, the value of the Libra will be tied to real assets, including bank deposits and valuable government securities.
Users will be fully exempted from fees for payments through the new crypto network. Businesses which have implemented cryptocurrency in their system will pay a very small commission. Facebook has stated that all smartphone users will be able to pay or receive payments.
THE LIBRA IS AN ATTRACTIVE CONCEPT BECAUSE IT AIMS TO BRING THE WORLD CLOSER TOGETHER AND HELP EVERYONE PROFIT FROM THE VIRTUAL CURRENCY
Facebook will benefit by providing more business opportunities across its family of apps. This means ads will be more effective, and businesses will increase their advertising spend. And if Facebook gains people’s trust with the Calibra wallet, it will enable it to offer more financial services and generate other revenue streams for the company.
HOW HAVE GOVERNMENT AUTHORITIES REACTED?
Policymakers around the world have upped the pressure on the Libra, fearing that it could severely disrupt the global financial system. It is an important issue for many regulators and lawmakers, who are concerned that the Libra could compete with government currencies. That is because Facebook is an extremely influential platform with a huge number of active users.
THE KEY CONCERN FOR GOVERNMENTS IS TO KEEP CURRENCIES UNDER CONTROL. IT IS POSSIBLE THAT FACEBOOK WILL EFFECTIVELY COMPETE WITH SOVEREIGN CURRENCIES LIKE THE EURO AND THE DOLLAR, AND THAT THE LIBRA WILL BECOME AN EFFECTIVE TOOL FOR FRAUDSTERS AND TERRORISTS
Facebook’s response is that it will not be minting new money with its digital coin. Libra is tied to a basket of currencies like the dollar to maintain its stable value.
Furthermore, it is planned that the Libra Network will rely on the practice of know-your-customer combined with the ability of law enforcement and regulators to conduct their own analyses of network activity. This will be a great opportunity to improve the monitoring and control of financial crime.