Facebook is planning to launch a new crypto-currency named Libra in the early 2020s. According to Facebook executives, Libra may be used as payment for online and offline services. It will be supported by an underlying blockchain-based network.
In the beginning, Libra will be used mainly to transfer money between individuals in developing countries who have not the strong financial system. And gradually, the goal is to create the first truly mainstream cryptocurrency: a decentralized global form of payment that is as stable as the dollar. It will be used to buy almost anything, supporting an entire range of financial products — from banking to loans to credit.
It has formed the nonprofit Libra Association with 27 other partners including venture capital firms, nonprofit organizations, crypto firms, and massive corporate finance, telecommunications, and technology service providers, including Coinbase, Mastercard, Visa, eBay, PayPal, Stripe, Spotify, Uber, Lyft, and Vodafone. Those organizations will also contribute to the Libra Reserve for its development.
“The goal really is to improve financial inclusion and facilitate the transfer of payments. It is just like what the internet has done in respect to the transfer of information and communication,” says Dante Disparte who is the newly hired head of policy and communications for the Libra Association.
The company, Facebook says that about 1.7 billion people, or 31 per cent of the global population, currently have no bank, with no access to modern financial services. This technology will provide immense benefits to their well-being, offering people free and lower-cost banking services.
This proposal, known as Project Libra, has also been discussed with US Treasury officials and is in communication with money transfer firms, including Western Union, in order to develop cheap, safe ways for people to send and receive money. According to the report, it would even let users transfer money using WhatsApp, its encrypted mobile-messaging app.
How does Facebook’s Cryptocurrency Will work?
- Name: The Libra codename as the public facing name, may likely to be used by Facebook for its cryptocurrency.
- Token: The cryptocurrency will be a stable coin. A token designed to have a stable price. It is to prevent complications due to price fluctuations during a payment or negotiation process. Communications have been made with various financial institutions regarding contributing capital to form a $1 billion basket of multiple international fiat currencies and low-risk securities.
- Usage: Communications has been made with merchants to accept the token as payment, and may offer sign-up bonuses. The company also wants to roll out physical devices for ATMs so users can exchange traditional assets for the cryptocurrency.