What is Facebook Libra Cryptocurrency?

In the last decade (2009-2019) Bitcoin and the cryptocurrency market gets a lot of attention worldwide. Satoshi Nakamoto developed Bitcoin in January 2009, and a new era for digital money has started. Since then there are more than 2900 cryptocurrencies developed and launched in the market. When Bitcoin price touched $20,000 in December 2017 that attracts a lot of new users and big names.

There are many announcements from the big banks and companies that there are working on developing their own cryptocurrencies. Facebook the number one social network did not want to fall behind. Facebook announced its new cryptocurrency project named Libra.

In this post, we will cover:

  • What is Facebook Libra?
  • Facebook Libra Coin Price
  • Facebook Libra Coin Launch Date
  • Where can you buy Facebook Libra coin?
  • Advantages of Facebook Libra
  • Disadvantages of Facebook Libra
  • Facebook Libra Coin V.S Bitcoin
  • How Facebook Libra coin will affect the Bitcoin and cryptocurrency market?

Zuckerberg is taking Facebook to a new level with Libra Cryptocurrency Project

You might have already heard about the booming cryptocurrency by Mark Zuckerberg. Facebook is about to launch the new cryptocurrency named Libra. It doesn’t have anything to do with the zodiac and horoscope. 

Like any other cryptocurrency, Facebook Libra is a globally accepted currency having its own independent financial infrastructure. As it is going to be developed, deployed and managed by Zuckerberg, we can anticipate a bright future for Libra. 

There are even questions arising about whether Libra will take over Bitcoin. This is enough to figure out how Libra has created its boom in the market before even launching. 

Also Read: What is Bitcoin? All you need to know about Bitcoin

Here are the features of Libra cryptocurrency:

  • Libra is built on a secure, scalable, and reliable blockchain.
  • It is a stable coin, backed by a reserve of assets.
  • Governed by its own independent Libra Association.
  • It uses the LibraBFT consensus mechanism.
  • It has Smart contract coding done with the “Move” programming language.
facebook libra partners
Facebook Libra partners

1 What Will Be the Price of Facebook Libra Coin?

What Will Be the Price of Facebook Libra Coin?
Facebook Libra

Facebook Libra cryptocurrency is a stablecoin. Stablecoins are those whos value will be constant and did not alter to market conditions. You all know Bitcoin and other cryptocurrencies are knows for their high volatility in price. High volatility has an opportunity to make good money in the short term but also has a very high risk of loss. The main reason why people are not invested in cryptocurrencies is their high volatility in price. However, Facebook Libra value remains always the same and will be pegged by multiple fiat currencies.

Libra will be backed by real fiat currencies and cash equivalents. That said, it means for every dollar of Libra that is in existence, there will be practically a “dollar” worth of real-world assets. The same token can be exchanged as a transaction.

You would get $1 worth of Libra by spending $1. So it is literally a cryptocurrency that simply converts a real $1 to Libra $1. You can use this facebook Libra coin across a variety of platforms or send it to your approved friend.

However, it is important to take note that Facebook is actually launching two cryptocurrencies: the one that everyone can use to transact – Libra and the one that will be only available to Facebook and its corporate partners – the Libra investment token.

Also Read: How to Earn Bitcoin? 13 Different Ways to Earn Bitcoin Free

2 Advantages of Libra

“First and foremost,” says Chapple, a cybersecurity and privacy expert, “Libra is designed to hold a stable value. Bitcoin and its competitors have market-driven valuations, meaning that the price of a Bitcoin is determined solely by market demand for Bitcoin. This creates a market fueled by speculation and subject to enormous volatility. Libra, on the other hand, is backed by a financial reserve that mixes the world’s major stable currencies. For every Libra coin in existence, there is an equivalent amount of cash sitting in the bank or short-term government securities. This stability promises to make Libra a stable currency for consumers rather than an attractive gamble for investors.” 

Stability

As we discussed above that Facebook Libra is a stablecoin means the price of the Facebook libra coin always remains the same. Facebook Libra coin is not for making money or profit like other cryptocurrencies (whose value is highly volatile). Moreover, Facebook Libra coin is used for instant transfer of funds and payment settlement for cross border payments.

User-Friendly

As Libra coin is launched by the biggest social network Facebook, it will be much easier to buy and sell or transfer funds to funds compared to the existing cryptocurrencies. For Bitcoin and other cryptocurrencies, you must have the technical knowledge to understand the working and making a transaction on the network. Creating a Bitcoin wallet is easy but securing your funds is not as easy. Facebook Libra coin will provide a secure environment to make transactions.

Huge User Base

Facebook is the largest social networking platform. Facebook has around 2.7 billion users that use its services (WhatsApp, Instagram, Messanger). On the other hand, Bitcoin and cryptocurrency market has less than 100 Million active users. The user base of Facebook is a major advantage for the adoption of the libra coin and blockchain technology.

Blockchain is Transparent

The major advantage of blockchain technology is its transparent nature. All the transactions are recorded in a public ledger and anyone can see the data stored in blocks. Your transaction can always be traced as long as it is online. Once data is stored in blocks and added to the blockchain it is very difficult to make any changes in the data.

3 Disadvantages of Libra

Disadvantages of Libra
Facebook Libra Centralized

Centralized System

Bitcoin is the king of the cryptocurrency market because of its fully decentralized structure. The man behind Bitcoin Satoshi Nakamoto is still a mystery. There are more than 2900 cryptocurrencies in the market (at the time of writing) and no one can replace Bitcoin. Bitcoin is the most decentralized cryptocurrency.

Facebook Libra coin may also face this because the supply and price os Libra is coin controlled by a central authority.

“One of the distrusted companies, wants us to trust its new Libra cryptocurrency, which, it hopes, will be used by billions of people around the world. We shouldn’t. Libra will almost exactly replicate all the problems generated by Facebook’s social network.”

The technological innovation that is supposed to liberate us from the government ends up subjugating us to a handful of corporations. Facebook Libra coin has been under some of the other disputes under the matter of privacies.

Also Read: What is Blockchain? How does Blockchain Work?

4 Libra Launch date 

Facebook is anticipating to launch its Libra in the first half of 2020. It wants to have at least 100 members in the Libra association before finally releasing it. 

The final decision-making authority will be the association, but Facebook will maintain its leadership role in 2019 at least. However, the whitepaper states that once the network is launched, all Association members will have the same commitments, privileges, and financial obligations as the others. Founding member. All colleagues will have the same governance strengths. Facebook has a built-in digital wallet called “Calibra” which will be used to interact with Libra.

Users will be able to send Libra via their smartphone using Calibra. To send funds to your Calibra wallet, Facebook will allow you to choose from a list of partner payment providers, such as MasterCard, Visa, PayPal, and Stripe. People will also be able to convert US dollars into Libra for their digital Calibra wallets, by going to local or online currency exchanges.

5 Problems That Facebook Libra is Facing Now

“Moving money around globally,” Facebook declares in the white paper laying out the company’s vision for its new cryptocurrency, “should be as easy and cost-effective as—and even more safe and secure than—sending a text message or sharing a photo.” Money is information: When I send money to you, I’m telling the financial system that wealth holdings assigned to me should now be recorded as assigned to you. 

Only tech-savvy people will dare to invest initially

Taking the example of bitcoin, Bitcoin was too hard to use in its initial stage. This gave birth to intermediary companies that supply “wallets,” platforms that are accessible to ordinary people. And the important process of confirming “mining” transactions in the language of bitcoin also turns out to be too complicated for ordinary people. This gave rise to sophisticated and rich entities that carry out this process. Once these big players are in their place, they become oligarchs who dominate the world of bitcoin. When the bitcoin protocol needs to be changed from time to time to overcome the inevitable problems, the oligarchy makes decisions and takes advantage of them. Facebook is predicting to face similar issues.

Ordinary people do not like the chaos 

We have already seen this story. Only the early Internet, along with some relatively simple applications like email and chats, created a decentralized communication system that had no central authority – no government, no company – consuming a lot of energy. But ordinary people don’t like the initial chaos on the Internet. They want a more structured environment, which has led to the creation of large social networks, especially Facebook. Once the structure exists, the system is no longer decentralized.

Fully decentralized Libra would not be usable

Facebook clearly knows this story. We all are quite aware that a fully decentralized dollars won’t work. But he also knew that a natural solution – a centralized currency controlled by Facebook – would not be credible. The White Paper resolves this problem by understanding both angles of the dilemma, arguing that Libra is decentralized and centralized. This scale is reportedly decentralized because it is based on blockchain, a technology used by bitcoin that ensures that data is stored by many users, not one, thus increasing security and transparency. Facebook itself will not work with Libra. But Libra is also centralized by creating a management body. This body is the Libra Association based in Switzerland. This body must prevent the emergence of a bitcoin oligarchy to dominate Libra.

Policy for Facebook Libra

Facebook makes a choice of rules – how to display information, how to use data – to the detriment of many. Now we see that Facebook regulates the freedom of expression and privacy of millions of people, the domain is usually left to the government. What was originally a libertarian utopia is now a highly regulated environment, although it is regulated by companies rather than our government.

Disputes between Facebook and the Libra association

It is not clear that in practice the Libra Association will operate differently from the oligarchy that dominates the bitcoin world. The White Paper contains detailed information on the operation of the Libra Association. It currently has 28 members and is expected to increase to 100. To launch the system, members pay money into the Libra Reserve, which will create and circulate an initial pool of Libras. 

Non-profit and for-profit companies 

The most important political decisions will be taken and finalized by two-thirds of the votes. A small number of non-profit organizations receive slot machines, but most members are large for-profit companies, including PayPal, Facebook / Calibra, Uber, Visa, Mastercard, Vodafone telecommunications company and various venture capital powers. Ordinary people who buy and use pounds have no vote.

After all, the Libra Association will be largely influenced and controlled by for-profit companies, not charities. These companies want to make money. The structure of the organization gives them a direct financial interest in Libra management because their investment in the reserve gives them dividends, which in turn depends on the assets the reserve has. If these assets appreciate, members make profits.

6 How to buy Libra

For investors hoping to cash in on Facebook’s crypto plans, there are two obvious choices: 

1) buy Facebook shares or 

2) buy Libra – when it becomes available in early 2020. 

Unlike most of its crypto predecessors, Libra will be backed by actual reserves, in this case, cash and government bonds.

7 Wallet of Libra

Libra will be a brand new currency, but in practice, the same as a dollar or euro. People will receive Libra by handing over national currency to organizations like Calibra, the subsidiary Facebook is setting up to handle pound transactions. Calibra, in turn, will transfer this money to Libra Reserve – a group of accounts held by financial custodians around the world. Money entering the reserve will be kept there or used to buy other low-risk government currency or bonds. Meanwhile, people with pounds can download them over the internet, using them to buy things or make gifts. You can exchange your pounds back to a national currency if you need to, with the money coming out of the reserve.

Also Read: What is a Bitcoin Wallet? Different Types of Bitcoin Wallet

8 Libra vs Bitcoin

  • While Facebook advertises Libra as a cryptocurrency, and Libra uses some of the same technology as bitcoin, Libra is actually quite different from bitcoin. 
  • There is no bitcoin reserve. 
  • If you want to exchange your bitcoin for dollars, you need to find someone willing to buy it. 
  • This is the source of bitcoin’s volatility: If people decide bitcoins are worth nothing, then no one will buy your bitcoin, and it is worth nothing. 
  • If people decide that Libras are worth nothing, they can trade them in for cash from the reserve. And because of this, people won’t decide Libras are worth nothing. 
  • The problem of volatility is solved.

Also Read: What is Bitcoin Halving? How Bitcoin Halving Affects Bitcoin Price?

9 Libra effects on the Cryptocurrency market

Libra is anticipated to be big and to have a bright future. As Facebook has 2.4 billion users, and if, as Facebook promises, they can jump free of charge from their Facebook accounts to Calibrate wallets to spend money, many of them will. Visa has issued over 2 billion credit cards and is used by over 40 million merchants. Vodafone has 444 million customers. Uber has 91 million passengers. With such a large user base – many of which are already useless Facebook algorithm toys – the Libra reserve will grow rapidly.

The company has already demonstrated that a successful technology platform can rapidly grow to an unimaginable size. A bank-like international organization with potential trillions of dollars in assets and, through its members, ties to billions of users around the world, will have a massive influence on people’s economic affairs and much political power to be effectively regulated by governments – just like a Facebook social network.

10 Final Thoughts

How the Libra Association will use its power is not that easy to predict now. The white paper is long on happy conversations and few details. The point is that along the plausible road to the future, it will gain immense power, and will not be due to the public, unlike central banks that manage national currencies. Throughout the flashy cryptocurrency futurism, Libra is a step backwards in social and political terms, the way bitcoin has tried to get us back to the gold standard age.

Until the creation of central banks in the 19th and 20th centuries, dead tree versions of the Libra Association abounded. They included family dynasties such as the Medicis and the Rothschilds and large private banks. Driven by profit and able to operate across national borders, they accumulated massive political power without loyalty to any particular nation – until governments finally controlled them.

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